the political economy of clientelism in this paper we argue that the political commitment problem provides an explanation for why much income redistribution takes an inefficient form particularly employment in the public sector a job is a credible way of redistributing when it provides rents such as in situations with moral hazard and employment is optimal ex post moreover a job is selective and reversible and thus ties the continuation utility of a voter to the political success of a particular politician we show that the need to make offers of employment incentive compatible leads to inefficiencies in the supply of public goods we also show that such inefficient redistribution becomes relatively attractive in situations with high inequality and low productivity inefficiency is increased when the stakes from politics are high when inequality is high and when money matters less than ideology in politics

the political dynamics of economic growth summary we argue that an understanding of the political drivers of economic growth needs an explanation of the political dynamics around the transition from one growth phase to another and that the political drivers of early stage growth accelerations are different from that of growth maintenance informal institutions are likely to play a role in growth acceleration while formal institutions of credible commitment the provisioning of public goods and the overcoming of co ordination failures will be more important in growth maintenance we present empirical evidence drawn from country case studies and cross country econometric analysis that provides support to our theoretical propositions

aggregate income shocks and infant mortality in the developing world health and income are strongly correlated both within and across countries yet the extent to which improvements in income have a causal effect on health status remains controversial the authors investigate whether short term fluctuations in aggregate income affect infant mortality using an unusually large data set of 1 7 million births in 59 developing countries the authors show a large negative association between per capita gdp and infant mortality female infant mortality is more sensitive than male infant mortality to negative economic shocks suggesting that policies that protect the health status of female infants may be especially important during economic downturns

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

bureaucracy infrastructure and economic growth evidence from u s cities during the progressive era recent work in the sociology of economic development has emphasized the establishment of a professional bureaucracy in place of political appointees as an important component of the institutional environment in which private enterprise can flourish i hypothesize that establishment of such a bureaucracy will lengthen the period that public decision makers are willing to wait to realize the benefits of expenditures leading to allocation of a greater proportion of government resources to long gestation period projects such as infrastructure this hypothesis can be tested using data generated by a natural experiment in the early part of this century when a wave of municipal reform transformed the governments of many u s cities controlling for city and time effects adoption of civil service is found to increase the share of total municipal expenditure allocated to road and sewer investment other estimates imply that this increased share raises the growth rate of city manufacturing employment by one half percent per year this abstract was borrowed from another version of this item

mass privatization state capacity and economic growth in post communist countries why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others scholars have advanced three main arguments 1 successful countries rapidly implemented neoliberal policies 2 failures were not due to poli cies but to poor institutional environments and 3 policies were counterproductive because they damaged the state we present a state centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance mass privatization programs where implemented created a massive fiscal shock for post communist governments thereby undermining the development of private sector gover nance institutions and severely exacerbating the transformational recession we performed cross national panel regressions for a sample of 25 post communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth state capacity and property rights protection we further tested these findings with firm level data from a rep resentative survey of managers in 3 550 companies operating in 24 post communist countries within countries that implemented mass privatized programs newly privatized firms were sub stantially less likely to engage in industrial restructuring but considerably more likely to use bar ter and accumulate tax arrears than their state owned counterparts

consumers opinion of inflation bias due to quality improvements abstract measurement of quality changes has proven to be an especially difficult aspect of calculating unbiased rates of inflation we propose a new methodology of capturing quality improvements based on consumer focus groups and apply this methodology in an environment where quality changes might be expected to be especially rapid and extensive a post communist transition economy we find that the methodology indicates a substantial understatement of quality improvements during transition and therefore a substantial overstatement of inflation resulting in a serious downward bias in growth rate estimates for post communist economies the move to free markets has apparently improved consumers welfare more by improving what they can purchase than by increasing how much they can purchase overall mismeasurement of quality changes may have understated czech growth rates during the first decade after communism by as much as 5 percentage points per year

bureaucratic rationality and the developmental state there has been a resuscitation of the view that the state can play an important role in the industrialization process but for states to be successful in fostering development they need a considerable degree of internal cohesiveness which is generally supplied by the presence of a robust weberian bureaucratic corps this article argues that while internal cohesiveness is indeed critical bureaucratic rule following can produce results in the opposite direction depending on the interagency relations that obtain within the state the effect of interagency relations is demonstrated through an examination of india and korea both have worked to foster industrialization and both are endowed with relatively healthy bureaucracies however the indian state was paralyzed and fragmented while its korean counterpart did secure the requisite internal coherence not only did the culture of rule following fail to generate a cohesive state in india but it in fact worked against such an outcome

bureaucratic capacity delegation and political reform thecentraltensionmotivatingcontemporarytheories of delegation from politicians to bureaucrats lies in the potential conflict between the value of bureaucratic expertise on one hand and the desire for political control on the other this tension is well known and has been debated at least since weber s classic work on bureaucracy modern bureaucracies are staffed with individuals who by virtue of rational bureaucratic organization are highly skilled policy experts who in principle should be able to help less knowledgeable politicians achieve their goals however the very skills and expertise that bureaucrats enjoy create the possibility that bureaucrats will usurp the rightful role of politicians in policymaking processes because the way this tension is resolved determines the ultimate compatibility of democracy and bureaucracy existing theories of delegation typically focus on understanding how and to what extent politicians can resolve it 1 in many contexts particularly developing democracies bureaucracy does not fit the weberian characteristics that are assumed in the existing delegation literature the bureaucracies may be staffed with individuals who lack the personal capacity to execute orders effectively the organizational structure may lead to breakdowns within bureaucratic hierarchies making it difficult for senior administrators to control their subordinates departments and ministries may lack basic budgets and resources to undertake implementation actions they may suffer from incentives for

bureaucracy and growth a cross national analysis of the effects of weberian state structures on economic growth the role of bureaucratic authority structures in facilitating economic growth has been a sociological concern since max weber s classic contributions almost 100 years ago using a recent and original data set we examine the characteristics of core state economic agencies and the growth records of a sample of 35 developing countries for the 1970 1990 period our weberianness scale offers a simple measure of the degree to which these agencies employ meritocratic recruitment and offer predictable rewarding long term careers we find that these weberian characteristics significantly enhance prospects for economic growth even when we control for initial levels of gdp per capita and human capital our results imply that weberianness should be included as a factor in general models of economic growth they also suggest the need for more attention by policymakers to building better bureaucracies and more research by social scientists on variations in how state bureaucracies are organized

cyclicality mortality and the value of time the case of coffee price fluctuations and child survival in colombia recent studies demonstrate procyclical mortality in wealthy countries but there are reasons to expect a countercyclical relationship in developing nations we investigate how child survival in colombia responds to fluctuations in world arabica coffee prices and document starkly procyclical child deaths in studying this result s behavioral underpinnings we highlight that 1 the leading determinants of child health are inexpensive but require considerable time and 2 as the value of time declines with falling coffee prices so does the relative price of health we find a variety of direct evidence consistent with the primacy of time in child health production

sustainable supply chain management in emerging economies environmental turbulence institutional voids and sustainability trajectories abstract although research on supply chain management has made many valuable contributions there is a dearth of empirical evidence and theoretical reflection on the characteristics of supply chains that operate mainly in developing and emerging economies the aim of this paper is to help to fill this gap by exploring how supply chain sustainability can be implemented and managed in these settings an in depth case study of the upstream oil and gas industry supply chain in brazil was used to develop propositions about supply chains that operate in developing settings drawing from institutional theory evolutionary theory complexity theory and from the organizational learning innovation and strategy literatures this paper offers four key findings and contributions to the supply chain literature first it shows that becoming a sustainable supply chain is not a destination but a journey where trajectory and time matter given the evolutionary nature of supply chain sustainability trajectories this paper highlights that supply chains learn and evolve just as organizations do second this research indicates that although globalization is a trend natural resource based supply chains are often more geographically bounded and susceptible to local social demands than other supply chains third this paper extends the supply chain literature by arguing that supply chains face additional barriers to sustainability in developing and emerging economies which contribute to a higher degree of complexity and uncertainty due to the existence of highly turbulent business environments and institutional voids these factors in turn hinder supply chain learning and innovation and reduce the slope of supply chains sustainability trajectories finally this research contributes to the literature by claiming that due to the highly complex and uncertain business environments in these settings focal companies play an even more important role in managing the escalating ambiguity stimulating supply chain learning and promoting innovation towards supply chains enhanced sustainability performance

bringing corporate governance into internalization theory state ownership and foreign entry strategies we use internalization theory to analyze the establishment and entry mode decisions of state owned soe and privately owned poe enterprises we enrich internalization theory by building on insights from economic theory of corporate governance and taking into account particular characteristics of soes such as non economic motivations long term orientation and different risk preferences we examine foreign entries over a 10 year period in the canadian oil and gas industry this single country and single industry context features foreign soes and poes from a wide range of home countries allowing a focused study of the combined influence of state ownership and home country factors compared to poes soes tend to prefer acquiring stand alone assets rather than firms and to take lower ownership shares we also find that differences between soes and poes diminish when home countries are characterized by high government quality and market orientation and identify differences between types of soes with partially owned soes exhibiting behaviors more similar to poes than fully owned soes we demonstrate how our enrichment of internalization theory strengthens its predictive and explanatory capacity our results also show that soes from strong and market oriented institutional environments are similar to poes and can be studied using the traditional internalization theory

corruption and trust theoretical considerations and evidence from mexico the growing empirical literature on political corruption shows trust interpersonal and political to be both cause and consequence of corruption a conclusion that largely builds on studies using

interpreting the korean crisis financial liberalisation industrial policy and corporate governance as the interpretation of its economic miracle has been so the interpretation of the recent crisis in korea remains highly controversial 1 although there are many important issues which have been raised by the korean crisis such as exchange rate policy labour market policy and the architecture of the international financial system chang 1998a three issues have been especially controversial in the debate financial liberalization industrial policy and corporate governance

a comparative study of inequality and corruption this article argues that income inequality increases the level of corruption through material and normative mechanisms the wealthy have both greater motivation and more opportunity to engage in corruption whereas the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases inequality also adversely affects social norms about corruption and people s beliefs about the legitimacy of rules and institutions thereby making it easier for them to tolerate corruption as acceptable behavior this comparative analysis of 129 countries using two stage least squares methods with a variety of instrumental variables supports the authors hypotheses using different measures of corruption the world bank s control of corruption index and the transparency international s corruption perceptions index the explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development the autho

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

poverty reduction during 1990 2013 did millennium development goals adoption and state capacity matter abstract while poverty reduction remains central in the post 2015 agenda its determinants remain debated in the literature especially the role of structural conditions related to governance this paper provides an assessment of two key dimensions the global adoption of mdgs and state capacity we do so by studying whether they facilitated convergence in income poverty measures using cross section and panel methods with data on 89 developing economies for the period 1990 2013 we find that poverty headcount and gap measures tended to decrease faster in countries with initially higher income poverty such convergence accelerated after 2000 suggesting that mdgs adoption was instrumental to poverty reduction however this still leaves unexplained substantial variation in poverty reduction performance across countries such variation is explained by state capacity countries with greater ability to administer their territories in 1990 experienced faster income poverty reduction and were more likely to have achieved the mdg target this result is insensitive to robust regression methods and to a large set of controls initial level of income dependence on natural resources education and health inputs dependence on foreign aid ethnic fractionalization regional effects and a set of governance variables as good governance and effective institutions are included in the sustainable development goals this result provides empirical justification for this move suggesting that more effective states could be crucial to sustain the development progress achieved so far

do focus groups and individual interviews reveal the same information for natural resource valuation abstract focus groups and individual interviews have become accepted methods used in the initial stages of valuation research whether focus groups and individual interviews reveal similar valuation information has not been thoroughly studied the research tests the hypothesis that focus groups yield the same ecosystem service information as do individual interviews the research also explores how the focus group and individual interview data might differ the analysis shows that focus groups and individual interviews are not substitutes they yield different information about ecosystem services and resource uses

state capacity and health outcomes comparing argentina s and chile s reduction of infant and maternal mortality 1960 2013 summary there is substantial quantitative evidence linking higher state capacity to better health outcomes but scant attention has been paid to the specific mechanisms through which this causal influence operates the problem is compounded by the considerable diversity of ways in which the influence of the state on development outcomes has been conceptualized making it hard for practitioners to extract policy lessons from this literature in this study i seek to help to address both of these problems through a historical comparative examination of the ways in which state capacity affected infant and maternal mortality reduction in argentina and chile over the last half century i show that chile s greater investment in health specific state capacities was behind the remarkable historical reversal of fortune between these two countries in terms of infant and maternal mortality levels from 1960 to the present as well as behind chile s notorious reduction in the territorial inequality of these outcomes i show the key difference between the two countries was the quality reach and homogeneity of their respective public health systems from a theoretical standpoint i argue that the notions of bureaucratic quality and infrastructural power are both necessary and complementary perspectives through which to conceptualize state capacity and understand its causal influence over health and other desirable developmental outcomes in turn this suggests that a useful way to specify calls for better governance and to achieve better long run health performance may be to invest in the public health system s technical bureaucratic autonomy and in its system wide planning and coordination capacities

experiments on the difference between willingness to pay and willingness to accept comment reply willingness to pay wtp and willingness to accept wta measures of welfare change have been found to differ substantially when elicited from surveys or experimental market transactions conventional economic theory suggests that the difference between wtp and wta should be smaller than those observed in empirical tests this study focuses on the hypothesis that the availability of substitutes for the good being evaluated affects the difference between the two measures the results suggest that the existence of a substitute does reduce the difference between wtp and wta however the difference between these two measures is significant with or without substitutes

constructing polities and markets an institutionalist account of european integration as institutions and governance structures develop in modern markets they tend to feed back onto economic activity through such feedback loops market and political arenas can develop symbiotically into relatively coherent fields that gradually embed actors orientations and activities using these insights this article develops and tests a theory of european integration focusing on the case of the european community the first pillar of the european union traders organized interests courts and the ec s policy making organs over time have produced a self sustaining causal system that has driven the construction of the european market and polity the generality of this explanation to a sociology of markets and polity building projects is discussed in the conclusion

corruption in russia abstractwe analyze the determinants of corruption in russia using law enforcement data on corruption incidents for a panel of 79 russian regions for the period 2004 13 we find that the relative salaries of bureaucrats determine corruption levels corruption declines as relative salaries rise yet at strongly diminishing rates furthermore we show that even very limited media freedom helps to curtail corruption other important determinants are the strength of law enforcement education levels and unemployment rates

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

is growth corrupted or bureaucratic panel evidence from the enlarged eu abstractthis article aims at analysing the issue of conditional convergence in the new enlarged european union eu over the period 1995 2012 by means of panel data techniques we examined the issue of conditional convergence in the enlarged eu giving particular attention to the effects of corruption and bureaucracy on growth controlling for a widely used set of explanatory variables such as investment domestic and foreign human capital formation inflation general government final consumption and trade openness furthermore we examine if growth responds differently to corruption and bureaucracy in the new eu members by means of two group specific interaction variables to capture possible different responses to corruption and bureaucracy the analysis reveals evidence of conditional convergence in the enlarged eu with investment share foreign direct investment human capital and country openness appearing as robust growth drivers in contrast inflation and government consumption rather hamper gro

the incidence and persistence of corruption in economic development abstract economic development and bureaucratic corruption are determined jointly in a dynamic general equilibrium model of growth bribery and tax evasion corruption arises from the incentives of public and private agents to conspire in the concealment of information from the government these incentives depend on aggregate economic activity which in turn depends on the incidence of corruption the model produces multiple development regimes transition between which may or may not occur in accordance with recent empirical evidence the relationship between corruption and development is predicted to be negative

property rights protest and the siting of hazardous waste facilities ture since that time no major hwf has been sited anywhere in the united states the epa had anticipated that local opposition would make finding these sites an exceptionally difficult task their pessimism was well founded and if anything understated according to the hazardous waste counsultant s latest state by state review the outlook for siting hwfs in the future is even more bleak than in the past due in large part to what they term a worsening of the emotional atmosphere surrounding siting efforts this failure to site any new hwf has come about in spite of assurances by government and company officials that new facilities built according to the present standards would pose negligible risks to the local residents attempts have been made to break the deadlock by instituting extensive public participation procedures establishing state siting boards with the power to overrule local decision makers and requiring facility owners to compensate local governments for safety services the latter provided in this paper we argue that the ambiguous nature of the present property rights governing the siting of hwfs is an important cause of the stalemate we offer a new approach to siting which recognizes the de facto property rights assumed by local communities we propose a political market via a referendum

bureaucratic structure and bureaucratic performance in less developed countries abstract we argue that several easily identifiable structural features constitute the key ingredients of effective state bureaucracies and should help to predict ratings of bureaucratic performance competitive salaries internal promotion and career stability and meritocratic recruitment we collect a new dataset on these features for bureaucracies of 35 less developed countries controlling for country income level of education and ethnolinguistic diversity we find that our measure of meritocratic recruitment is a statistically significant determinant of ratings supplied by two of three country risk agencies the importance of competitive salaries and internal promotion and career stability could not be clearly established

corruption and the costs of redistribution micro evidence from indonesia this paper examines the degree to which the corruption in developing countries may impair the ability of governments to redistribute wealth among their citizens specifically i examine a large antipoverty program in indonesia that distributed subsidized rice to poor households i estimate the extent of corruption in the program by comparing administrative data on the amount of rice distributed with survey data on the amount actually received by households the central estimates suggest that on average at least 18 of the rice appears to have disappeared ethnically heterogeneous and sparsely populated areas are more likely to be missing rice using conservative assumptions for the marginal cost of public funds i estimate that the welfare losses from this corruption may have been large enough to offset the potential welfare gains from the redistributive intent of the program these findings suggest that corruption may impose substantial limitations on developing countries redistributive efforts and may help explain the low level of transfer programs in developing countries d 2005 elsevier b v all rights reserved

quality change in price indexes price indexes provide the fundamental building blocks for measuring the general price level along with real incomes and real output but the most important single price index for the united states the cpi has been criticized as significantly underestimating the pace of quality change this paper sketches the issues involved in the measurement of quality change in price indexes it reviews the theory of quality change discusses how the bureau of labor statistics deals with quality change and provides examples of measurement issues in practice it concludes with a proposal to resolve the massive uncertainties in this area

polarization politics and property rights links between inequality and growth most efforts to trace the effects of income inequality on growth have focused on redistribution however empirical investigation has not substantiated either the positive association of income inequality with redistribution or the negative association of redistribution with economic growth the authors analyze the effects of inequality in the broader context of social polarization they argue that social polarization whether rooted in income inequality or in ethnic tension makes large changes in current policies including those guaranteeing the security of contract and property rights more likely under a wide range of institutional arrangements the resulting uncertainties in the policy and contractual environment hinder growth they find strong empirical support for both parts of this argument the policy implications of their argument are quite distinct from those of arguments that inequality reduces growth by increasing pressures for redistribution if redistributive policies per se were to blame for the low growth resulting from inequality governments that seek to mitigate income inequality must inevitably confront a tradeoff between equity and growth if on the other hand the insecurity of property rights slows growth in unequal or otherwise polarized societies governments that commit over the long run to particular redistributive policies incur less risk of slowing economic growth fiscal redistribution that reduces inequality may actually increase growth by reducing the risks of political uncertainty

why resource poor dictators allow freer media a theory and evidence from panel data every dictator dislikes free media yet many nondemocratic countries have partially free or almost free media in this article we develop a theory of media freedom in dictatorships and provide systematic statistical evidence in support of this theory in our model free media allow a dictator to provide incentives to bureaucrats and therefore to improve the quality of government the importance of this benefit varies with the natural resource endowment in resource rich countries bureaucratic incentives are less important for the dictator hence media freedom is less likely to emerge using panel data we show that controlling for country fixed effects media are less free in oil rich economies with the effect especially pronounced in nondemocratic regimes these results are robust to model specification and the inclusion of various controls including the level of economic development democracy country size size of government and others

public goods institutions human capital and growth evidence from german history what are the origins and consequences of the state as a provider of public goods we study public goods provision established through new laws in german cities during the 1500s cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster legal change occurred where ideological competition introduced by the protestant reformation interacted with local politics we study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions and find support for a causal interpretation of the relationship between legal change human capital and growth

governance and the effectiveness of public health subsidies evidence from ghana kenya and uganda abstract distributing subsidized health products through existing health infrastructure could substantially and cost effectively improve health in sub saharan africa there is however widespread concern that poor governance in particular limited health worker accountability seriously undermines the effectiveness of subsidy programs we audit targeted bed net distribution programs to quantify the extent of agency problems we find that around 80 of the eligible receive the subsidy as intended and up to 15 of subsidies are leaked to ineligible people supplementing the program with simple financial or monitoring incentives for health workers does not improve performance further and is thus not cost effective in this context

does governance cause growth evidence from china this study tests the causal relationships between quality of governance and economic growth at the provincial level in china during the post mao reform era exploiting the wide cross provincial variation and rapid change over time in governance institutions and economic performance in china during this period covering 1985 2005 the study provides a new perspective on the relationship between governance and growth whereas a large body of prior literature has demonstrated a strong positive association between high quality governance institutions and good economic performance at the cross country level few quantitative studies have explicitly tested the direction of causality between changes in governance quality and changes in economic outcomes this study aims to address this gap in the literature by testing two causal hypotheses on the interplay between provincial level governance and economic performance in china i improvements in provincial quality of governance predict subsequent economic growth rates and ii increases in provincial economic growth rates predict subsequent changes in quality of governance using new heterogeneous granger causality tests that allow for potential differences in the causal relations across provinces i show a significant and positive effect of economic growth on subsequent quality of governance largely driven by growth in the secondary sector but no significant effect of quality of governance on economic growth these findings suggest that improvements in formal governance have not been a key factor driving china s rapid growth instead the observed positive association between governance and growth reflects the ability of provincial governments to harness the potential created by economic growth to implement subsequent governance improvements for researchers studying the effect of governance on growth the results suggest that greater attention should be paid to possible reverse causality from economic outcomes to governance changes

the institutional foundations of public policy documento de trabajo 90 presidential address to the latin american and caribbean economic association lacea paris november 2005 titulo tomado de la pantalla de presentacion visto 12 de septiembre de 2011 noviembre 2005 incluye referencias bibliograficas

the costs of patronage evidence from the british empire i combine newly digitized personnel and public finance data from the british colonial administration for the period 1854 1966 to study how patronage affects the promotion and incentives of governors governors are more likely to be promoted to higher salaried colonies when connected to their superior during the period of patronage once allocated they provide more tax exemptions raise less revenue and invest less the promotion and performance gaps disappear after the abolition of patronage appointments patronage therefore distorts the allocation of public sector positions and reduces the incentives of favored bureaucrats to perform

bureaucracy and growth we revisit the hypothesis that a weberian bureaucracy enhances economic growth theoretically we develop arguments for why such a bureaucracy may enhance growth and discuss plausible counterargume

consumer prices the consumer price index and the cost of living after presenting major findings and recommendations the cpi commission reiterates the estimate of a 1 1 percentage point per annum upward bias it rejects the contention that the bls already makes substantial corrections for quality change that quality improvements and new products accrue only to the rich and that procedures to make more extensive quality adjustments valuations of new products and adjustments for commodity and outlet substitution are impractical the bias in the cpi can be sharply reduced as the authors detail in this paper coauthors are ellen r dulberger robert j gordon zvi griliches and dale w jorgenson

truth telling by third party auditors and the response of polluting firms experimental evidence from india in many regulated markets private third party auditors are chosen and paid by the firms that they audit potentially creating a conflict of interest this article reports on a two year field experiment in the indian state of gujarat that sought to curb such a conflict by altering the market structure for environmental audits of industrial plants to incentivize accurate reporting there are three main results first the status quo system was largely corrupted with auditors systematically reporting plant emissions just below the standard although true emissions were typically higher second the treatment caused auditors to report more truthfully and very significantly lowered the fraction of plants that were falsely reported as compliant with pollution standards third treatment plants in turn reduced their pollution emissions the results suggest reformed incentives for third party auditors can improve their reporting and make regulation more effective jel codes q56 m42 d22 copyright 2013 oxford university press

policy evaluation via composite indexes qualitative lessons from international transparency policy indexes summary international transparency policy indexes itpis help determine billions in investment and aid influence authoritative scholarship and shape policy choices are itpis valid yardsticks of transparency or do they encourage dissimulation most scholarship on index based evaluations focuses on concept indexes e g governance from quantitative approaches this paper presents qualitative insights about itpis in specific and policy indexes in general analyzing three measurement related pitfalls and proposing countermeasures most significantly it shows how indexes presuppose substitutability while policies contain nonsubstitutable necessary policy provisions this dilemma of ontological compatibility means that policies can rank favorably on indexes notwithstanding the absence of lynchpin policy provisions

height health and cognitive function at older ages research across a number of disciplines has highlighted the role of early life health and circumstance in determining health and economic outcomes at older ages nutrition in utero and in infancy may set the stage for the chronic disease burden that an individual will face in middle age david j barker 1998 barker et al 1989 johann eriksson et al 2001 childhood health may also have significant effects on economic outcomes in adulthood collectively a set of childhood health measures can account for a large fraction of the explained variance in employment and social status observed among a british cohort followed from birth into adulthood anne case angela fertig and christina paxson 2005

the political economy of authoritarian single party dominance why do authoritarian dominant parties once established continue to win elections or lose power employing a time series cross national analysis of election outcomes and two country case studies the author shows that dominant parties endure despite poor economic performance voter demand for new parties and sufficiently permissive electoral institutions instead the author demonstrates that dominant parties continue to win when they can politicize public resources and they fail when privatizations put the state s fiscal power out of their reach the argument has implications for the fate of dominant parties transitions to democracy in competitive authoritarian regimes and the study of incumbency advantages and electoral fairness in comparative politics

the market for public office why the indian state is not better at development abstract how and why officials are transferred from one post to another can in india does have far reaching consequences for the effectiveness of public service organizations such as irrigation agriculture forestry and soil conservation departments the transfer mechanism used in many departments of indian states involves a kind of internal labor market a truer market than in the way that term is often used by labor market economists it allows pressures for corrupt behavior to bear down on the incumbents of certain posts and itself amplifies those pressures frequently the pressures on officials to be corrupt cause them to behave in ways contrary to the ostensible objectives of their departments why is the indian state not better at promoting development to an important degree because of the corruption transfer mechanism and its effects on bureaucratic initiatives

does inflation kill exposure to food inflation and child mortality abstract unlike extreme malnutrition shocks such as famine and drought which grab the attention of the media international aid organizations and policymakers malnutrition due to food price hikes are often neglected and their impacts on children are not well known it is well established that malnutrition during the critical periods of early life between conception and the first 1000 days after birth has lasting consequences on health and mortality in this paper using a uniquely constructed data from ethiopia that takes advantage of high frequency local retail food prices we examine the impact of early life exposure to food price inflation on child mortality following survival events since conception we estimate the causal impact of exposure to inflation during in utero and infancy the results show that exposure to a 10 percent inflation in staple food prices during in utero decreases the survival of children under the age of five by about 5 4 percent we also find that the impacts are non linear depending on the specific month of exposure and substantially vary by observable characteristics and the type of staple food

structural blockage a cross national study of economic dependency state efficacy and underdevelopment this cross national study of the effects of dependency and state efficacy on development supports the structural blockage argument of dependency theory according to this argument international economic dependency impedes development in the more advanced countries of the periphery of the world capitalist system in support of this argument we show that two forms of participation in the world economy the export of a small number of commodities and the export of primary products obstruct development in advanced peripheral countries the argument that these forms of participation in trade pose internal structural obstacles to development is supported by evidence showing that state sponsored institutional transformations outweigh the development stunting influence of these forms of participation on the basis of these findings we argue against the divergent development thesis implied in some dependency arguments

information and the divergence between willingness to accept and willingness to pay abstract there is considerable empirical and experimental evidence that there is a divergence between willingness to accept compensation to give up a good and willingness to pay to obtain a good this divergence persists even when the good in question is small relative to income a result in apparent conflict with standard economic theory this paper develops a theoretical bidding model with costly information acquisition to explain this divergence the model generates a gap between offers to sell and bids to buy consistent with the experimental results we argue that the model does a better job of explaining empirical and experimental data than either of the two commonly invoked theoretical explanations the endowment effect and the substitution effect

economic regulations red tape and bureaucratic corruption in post communist economies summary should state regulatory involvement in the economy necessarily generate corruption while excessive regulatory burden is often treated as a cause of corruption this paper argues otherwise it distinguishes regulatory policy or de jure regulatory regimes from regulatory implementation and offers a more nuanced argument about the relationship between state regulations and bureaucratic corruption the analysis of business survey data covering 25 post communist economies demonstrates that mechanisms of regulatory implementation rather than heavy handed regulatory policy are responsible for bribery this analysis draws attention to the theoretical distinction between different types of regulatory hurdles and their differential effects on the quality of governance

a new database on human capital stock in developing and industrial countries sources methodology and results abstract the paper describes the techniques and data adopted for the construction of a new series of estimates of the stock of education in 85 countries over 28 years 1960 1987 the series are built from enrollment data using the perpetual inventory method adjusted for mortality estimates are corrected for grade repetition among school goers and country specific drop out rates for primary and secondary students enrollment data series used start as far back as 1930 for most countries and even earlier for others this reduces the need for backward extrapolation of enrollments to provide the initial estimates of the investment inventory

distribution and development in a model of misgovernance abstract this paper presents an analysis of bureaucratic corruption income inequality and economic development the analysis is based on a dynamic general equilibrium model in which bureaucrats are appointed by the government to implement a redistributive programme of taxes and subsidies designed to benefit the poor corruption is reflected in bribery and tax evasion as bureaucrats conspire with the rich in providing false information to the government in accordance with empirical evidence the model predicts a positive relationship between corruption and inequality and a negative relationship between corruption and development

strengthening state capabilities the role of financial incentives in the call to public service we study a recent recruitment drive for public sector positions in mexico different salaries were announced randomly across recruitment sites and job offers were subsequently randomized screening relied on exams designed to measure applicants intellectual ability personality and motivation this allows the first experimental estimates of i the role of financial incentives in attracting a larger and more qualified pool of applicants ii the elasticity of the labor supply facing the employer and iii the role of job attributes distance attractiveness of the municipal environment in helping fill vacancies as well as the role of wages in helping fill positions in less attractive municipalities a theoretical model guides each stage of the empirical inquiry we find that higher wages attract more able applicants as measured by their iq personality and proclivity towards public sector work i e we find no evidence of adverse selection effects on motivation higher wage offers also increased acceptance rates implying a labor supply elasticity of around 2 and some degree of monopsony power distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

fighting corruption to improve schooling evidence from a newspaper campaign in uganda what are the most effective ways to increase primary school enrollment and student learning we argue that innovations in governance of social services may yield the highest return since social service delivery in developing countries is often plagued by inefficiencies and corruption we illustrate this by using data from an unusual policy experiment a newspaper campaign in uganda aimed at reducing capture of public funds by providing schools parents with information to monitor local officials handling of a large education grant program the campaign was highly successful and the reduction in capture had a positive effect on enrollment and student learning jel d73 i22 o12

merit tenure and bureaucratic behavior evidence from a conjoint experiment in the dominican republic bureaucratic behavior in developing countries remains poorly understood why do some public servants yet not others work hard to deliver public services misuse state resources and or participate in electoral mobilization a classic answer comes from weber bureaucratic structures shift behavior toward integrity neutrality and commitment to public service our study conducts the first survey experimental test of the effects of bureaucratic structures it does so through a conjoint experiment with public servants in the dominican republic looking at merit examinations and job stability we find that weber was right but only partially recruitment by examination curbs corruption and political services by bureaucrats while enhancing work motivation job stability by contrast only decreases political services tenured bureaucrats are less likely to participate in electoral mobilization examinations thus enhance the quality of bureaucracy motivation and lower corruption and democracy electoral compe

traveling agents political change and bureaucratic turnover in india abstract we develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns and the consequent implications for bureaucrats career investments unique microlevel data on indian bureaucrats support our key predictions politicians use frequent reassignments transfers across posts of varying importance to control bureaucrats high skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts we find evidence of two alternative paths to career success officers of higher initial ability are more likely to invest in skill but caste affinity to the politician s party base also helps secure important positions

political foundations of the resource curse in this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse we show 1 politicians tend to over extract natural resources relative to the efficient extraction path because they discount the future too much and 2 resource booms improve the efficiency of the extraction path however 3 resource booms by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections increase resource misallocation in the rest of the economy 4 the overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create countries without such institutions however may suffer from a resource curse

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

household level consumption in urban ethiopia the effects of a large food price shock summary we use survey data to investigate how urban households in ethiopia coped with the food price shock in 2008 qualitative data indicate that the high food price inflation was by far the most adverse economic shock between 2004 and 2008 and that a significant proportion of households had to adjust food consumption in response regression results indicate that households with low asset levels and casual workers were particularly adversely affected by high food prices we interpret the results as pointing to the importance of growth in the formal sector so as to generate more well paid and stable jobs

a free press is bad news for corruption abstract this paper tests the proposition that a free press may be a powerful control on corruption we find evidence of a significant relationship between more press freedom and less corruption in a large cross section of countries this result is robust to specification and sample and the relationship is not sensitive to the choice of a particular measure of corruption or of press freedom furthermore we present evidence which suggests that the direction of causation runs from higher press freedom to lower corruption

transparency and corruption evidence from india abstracttheories of corruption suggest that higher levels of transparency are necessarily associated with lower levels of corruption yet in highly hierarchical societies in which the gulf between government officials and the most underprivileged members of society is very wide this relationship may not hold in this paper i test the link between transparency and corruption by means of a field experiment i ask how effective recourse to a freedom of information law is in comparison to bribery for both slum dwellers and middle class individuals in india as they apply for basic public services i demonstrate that applicants who make use of the freedom of information law attain almost the same rate of success as those who bribe recourse to a freedom of information law comes close to erasing class differences that is it results in comparable processing times for slum dwellers and middle class individuals

growth effects of foreign and domestic investment over tha past few years numerous studies in sociology have concluded that foreign investment harms poor nations these studies have focused on the coefficient for foreign capital stock controlling for flow new investment and defying logic have inferred that a negative coefficient for stock reflects dependency effects that retard economic growth since capital stock is the denominator for investment rate the greater the stock the lower the investment rate for a given level of new investment hence the negative coefficient for capital stock found in dependency studies indicates a beneficial investment effect not a harmful effect this point is demonstrated by reanalysis of the data used in dependency studies in these data foreign investment spurs growth earlier analysts have concluded otherwise only because their conclusions have belied their findings

the state led transition to liberal capitalism neoliberal organizational world systems and social structural explanations of poland s economic success neoliberals argue that rapid liberalization and privatization can transform postcommunist economies into western style capitalist systems organizational sociologists argue that these policies produce a unique variety of capitalism while world systems theorists argue that they lead to underdevelopment this article advances a social structural alternative in a crucial case poland s relative economic success resulted from prolonged state ownership and an interventionist state employing various industrial policy tools that facilitated efficiency enhancing market oriented restructuring before ushering in beneficial foreign direct investment the resulting capitalist system closely resembles the typical pattern found in most late industrializers

running out of steam a political incentive perspective of fdi inflows in china drawing on the sociological literature of state bureaucracy we develop a political incentive perspective on fdi inflows we argue that political term as a core feature of career advancement in state bureaucracy influences the incentives of newly appointed government officials and in turn their efforts toward achieving the state s goal of attracting fdi due to the mandatory retirement age which limits the career advancement officials in their first terms perceive that they have better chances of promotion and hence have stronger incentives to work toward advancement than those continuing to serve in the current position for the following term we test this argument by examining chinese city government leaders and fdi inflows in their cities from 2003 to 2010 using a difference in differences design the results show that first term leaders who are newly appointed after political turnover attract more fdi inflows than continuing leaders the difference is smaller when the new leaders are close to retirement but greater if they are appointed to cities with low prior gdp performance this study offers a new perspective on intra country fdi variations and extends the literature on the role of political institutions by investigating the political incentives of government officials

the global economy as instituted process the case of central and eastern europe i argue that economic globalization indicated by the tremendous rise in world foreign direct investment fdi in recent decades is not driven simply by investor considerations of economic risk and return but is significantly shaped by the construction of demand for foreign capital by receiving states states signal this demand through the levels of formal and substantive legitimacy they grant to fdi they institutionalize globalization in formal rule as a normatively desirable development strategy states substantiate this commitment by providing domestic and foreign actors with ideational and organizational resources to facilitate fdi to illustrate this argument i use the case of central and eastern europe which was largely closed to global capital before the collapse of communism analyses of quantitative and qualitative data show that substantive legitimacy granted to fdi by host states more than formal regulations determined the size of foreign capital flows into postsocialist countries in the

emergence and persistence of inefficient states we present a theory of the emergence and persistence of inefficient states based on patronage politics the society consists of rich and poor the rich are initially in power but expect to transition to democracy which will choose redistributive policies taxation requires the employment of bureaucrats by choosing an inefficient state structure the rich may be able to use patronage and capture democratic politics so reducing the amount of redistribution in democracy moreover the inefficient state creates its own constituency and tends to persist over time intuitively an inefficient state structure creates more rents for bureaucrats than would an efficient one when the poor come to power in democracy they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats anticipating this when the society starts out with an inefficient organization of the state bureaucrats support the rich who set lower taxes but also provide rents to bureaucrats we obtain that the rich bureaucrats coalition may also expand the size of bureaucracy excessively so as to generate enough political support the model shows that an equilibrium with an inefficient state is more likely to arise when there is greater income inequality when bureaucratic rents take intermediate values and when individuals are sufficiently forward looking jel p16 h11 h26 h41

inflation dynamics and food prices in ethiopia during the global food crisis ethiopia experienced an unprecedented increase in inflation among the highest in africa using monthly data over the past decade we estimate models of inflation to identify the importance of the factors contributing to cpi inflation and three of its major components cereal prices food prices and non food prices our main finding is that movements in international food and goods prices measured in domestic currency determined the long run evolution of domestic prices in the short run agricultural supply shocks affected food inflation causing large deviations from long run price trends monetary policy seems to have accommodated price shocks but money supply growth affected short run non food price inflation our results suggest that when analyzing inflation in developing economies with a large food share in consumer prices world food prices and domestic agricultural production should be considered omitting these factors can lead to biased results and misguided policy decisions

who delivers partisan clients in the argentine electoral market why do some parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain such differences by focusing on political parties access to resources supply side and voters dependence on fiscal largesse demand side we show how these differences affect the patron s choice of public sector wages and employment we use subnational level data to show different electoral returns from patronage for the two major political coalitions in argentina peronism and the ucr alianza and their effect on preferences over public sector wages and employment w hy do some political parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain returns to patronage by highlighting differences in the political parties access to resources supply side and the voter s dependence on public sector jobs demand side we propose that just as political parties cater their policies to particular groups of voters they pursue different strategies when allocating pork in exchange for support on the supply side we highlight the importance of partisan biases in the fiscal and electoral institutions that regulate the access and distribution of public resources on the demand side we show that patronage is a distributive mechanism that provides different returns to voters with different skills and labor market expectations

has democracy slowed growth in asia summary has democracy slowed growth in asia while there are a number of reasons to suggest that it has no one has tested this hypothesis hypotheses linking asia s democracies and autocracies to growth are tested in a within panel regression framework that controls for country fixed effects global time fixed effects the other major variables affecting growth and for endogeneity between the right hand side regressors the democracy slows growth hypothesis is tested against the toughest counterfactual the bureaucratically capable authoritarian regimes of east asia s developmentally minded governments findings reject the democracy slows growth hypothesis and show that democracy causes growth and investment to rise

sunshine as disinfectant the effect of state freedom of information act laws on public corruption abstract we assess the effect of freedom of information act foia laws on public corruption in the united states specifically we investigate the impact of switching from a weak to a strong state level foia law on corruption convictions of state and local government officials the evidence suggests that strengthening foia laws has two offsetting effects reducing corruption and increasing the probability that corrupt acts are detected the conflation of these two effects led prior work to find little impact of foia on corruption we find that conviction rates approximately double after the switch which suggests an increase in detection probabilities however conviction rates decline from this new elevated level as the time since the switch from weak to strong foia increases this decline is consistent with officials reducing the rate at which they commit corrupt acts by about 20 these changes are more pronounced in states with more intense media coverage for those that had more substantial changes in their foia laws for foia laws which include strong liabilities for officials who contravene them for local officials and for more serious crimes conviction rates of federal officials who are not subject to the policy show no concomitant change

quantifying quality growth we introduce an instrumental variables approach to estimate the importance of unmeasured quality growth for a set of 66 durable consumer goods our instrument is based on predicting which of these 66 goods will display rapid quality growth using pooled cross relatively sections of households in the 1980 through 1996 u s consumer expenditure surveys we estimate quality engel curves for 66 durable consumer goods based on the extent richer households pay more for a good conditional on purchasing we use the slopes of these curves to predict the rate of quality upgrading just as if households are ascending these quality engel curves over time we find that the average price paid rises faster for goods with steeper quality slopes bls prices likewise increase more quickly for goods with steeper quality slopes suggesting the bls does not fully net out the impact of quality upgrading on prices paid we estimate that quality growth averages about 3 7 per year for our goods with about 60 of this or 2 2 per year showing up as higher inflation rather than higher real growth