It is widely accepted, not least in the agreement establishing the World Trade Organization (WTO), that the purpose of the world trade regime is to raise living standards all around the world — rather than to maximize trade per se. Increasingly, however, the WTO and multilateral lending agencies have come to view these two goals — promoting development and maximizing trade — as synonymous, to the point where the latter easily substitutes for the former. The net result is a confounding of ends and means. Trade has become the lens through which development is perceived, rather than the other way around. Imagine a trading regime in which trade rules are determined so as to maximize development potential, particularly that of the poorest nations in the world. Instead of asking, "How do we maximize trade and market access?" negotiators would ask, "How do we enable countries to grow out of poverty?" Would such a regime look different than the one that exists currently? The answer depends on how one interprets recent economic history and the role that trade openness plays in the course of economic development. The prevailing view in G7 capitals and multilateral lending agencies is that economic growth is dependent upon integration into the global economy. Successful integration in turn requires both enhanced market access in the advanced industrial countries and a range of institutional reforms at home (ranging from legal and administrative reform to safety nets) to render economic openness viable and growth – promoting. This can be ca lled the "enlightened standard view" – enlightened because of its recognition that there is more to integration than simply lowering tariff and non–tariff barriers to trade, and standard because it represents the conventional wisdom.In this conception, the WTO ’s focus on expanding market access and deepening integration through the harmonization of a wide range of "trade–related" practices is precisely what development requires. This paper presents an alternative account of economic development, one which questions the centrality of trade and trade policy and emphasizes instead the critical role of domestic institutional innovations. It argues that economic growth is rarely sparked by imported blueprints and opening up the economy is hardly ever critical at the outset. Initial reforms instead tend to combine unconventional institutional innovations with some elements from the orthodox recipe. They are country–specific, based on local knowledge and experimentation. They are targeted to domestic investors and tailored to domestic institutional realities.
A straightforward extension of the standard Stigler–Peltzman model of regulation, coupled with the Taagepera–Shugart analysis of electoral–system effects, suggests: (a) that the greater the seat–vote elasticities of majoritarian electoral systems will tilt policy in favor of consumers, while proportional systems should strengthen producers; and (b)that the pro–consumer bias of majoritarian systems should be manifested in systematically lower prices. Empirical tests, controlling for structural determinants of national price levels established in the earlier "law of one price" literature, establish majoritarian electoral systems as a significant and robust predictor, lowering national price levels in the mean OECD country by between ten and seventeen percent.
The process of European monetary integration varied widely among countries and over time. This paper argues that an important explanation for the evolution of European exchange rate arrangements was the sectoral impact of their expected effects on European trade and investment. In this perspective, the principal benefit of European MI was its expected easing of cross–border trade and investment within the EU, while its principal cost was the loss of national governments' ability to use currency policy to improve the competitive position of their producers. Empirical results indeed indicate that a stronger and more stable currency was associated with variables used as proxies for private economic interests — the importance of manufactured exports to the DM zone, and improvements in net exports. This suggests a powerful impact of private–interest factors in determining national currency policies.
In overlapping–generations models of public goods provision, in which the contribution decision is binary and lifetimes are finite, the set of symmetric subgame–perfect equilibria can be categorized into three types: seniority equilibria in which players contribute (effort) until a predetermined age and then shirk thereafter; dependency equilibria in which players initially shirk, then contribute for a set number of periods, then shirk for the remainder of their lives; and sabbatical equilibria in which players alternately contribute and shirk for periods of varying length before entering a final stage of shirking. In a world without discounting we establish conditions for equilibrium and demonstrate that for any dependency equilibrium there is a seniority equilibrium that Pareto–dominates it ex ante. We proceed to characterize generational preferences over alternative seniority equilibria. We explore the aggregation of these preferences by embedding the public goods provision game in a voting framework and solving for the majority–rule equilibria. In this way we can think of political processes as providing one natural framework for equilibrium selection in the original public–goods provision game.
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre–tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.
Western US agriculture is an industry that has shaped and been shaped by a peculiar labor policy: the most numerous seasonal workers were assumed to be outsiders who would not remain employed in the industry or live in the community in which they worked for more than 10 to 20 years. Instead of integration policy, the emphasis of farm employers was on how to find new workers willing to accommodate themselves to seasonal employment.
The ideal introduction to U.S.-Mexican relations, The United States and Mexico moves from the conflicts all through the nineteenth century up to the current democratic elections in Mexico. Domínguez and Castro deftly trace the path of the relationship between these North American neighbors from bloody conflict to (wary) partnership. By covering immigration, drug trafficking, NAFTA, democracy, environmental problems and economic instability, this volume provides a thorough look back and an informed vision of the future.
For much of Canadian history, particularly during the critical era of mass migration that straddled the decades of the turn of the century, the government may have welcomed immigrants with an open hand, but that same hand was also forcefully pressing immigrants into a narrowly–defined geographic and economic corner. Indeed, what distinguishes Canadian immigration history during the first half of this century, and makes it so different from that of the United States, is the degree to which Canadian immigration policy and practice was predicated on the notion that the place for non–English speaking immigrants, foreigners as they were commonly called, and for their Canadian–born children and children's children through the generations was in the Canadian hinterland, engaged in farming and extractive labor.
In this paper I argue that there is a significant isomorphism between a host country?s political system and newcomers? participation. During the "first wave" of mass migration to North America from 1880 to 1920 some immigrants brought radical new ideas, significantly influencing worker and socialist movements. The influence of "second wave" immigrants appears more subtle, a careful jockeying for space within existing political structures. I suggest that political institutions exert a selection effect on potential immigrant community leaders both before and after migration. These selection processes reinforce prevailing political discourses and ways of participating.
This book creates a comprehensive understanding of the status of national security in the Middle East. The essays break new ground by integrating five variables into a new national security paradigm: political legitimacy, ethnic and religious tolerance, economic capabilities, availability of essential natural resources, and military capabilities. The impressive group of contributors provides data and analysis on both a country and a regional level to underscore the interrelationships among the variables in the paradigm.
It appears likely that the number of currencies in the world, having proliferated along with the number of countries over the past fifty years, will decline sharply over the next two decades. The question I plan to pose here is, where, from an economic point of view, should we aim for this process to stop? Should there be a single world currency, as Richard Cooper (1984) boldly envisioned? Should there remain multiple major currencies but with a much stricter arrangement among them for stabilizing exchange rates, as say Ronald McKinnon (1984) or John Williamson (1985) recommended? Building on Maurice Obstfeld and Kenneth Rogoff (2000b,d), I will argue here that the status quo arrangement among the dollar, yen and the euro (which I take to be benign neglect) is not far from optimal, not only for now but well into the new century. And it would remain a good system even if political obstacles to achieving greater monetary policy coordination – or even a common world currency — could be overcome. Again, this is not a paper on, say, the pros and cons of dollarization for small and medium–sized economies, but rather on arrangements among the core currencies.
This research examines how the expansion of education, and its changing role in labor markets, has shaped employment experiences of newly–arriving immigrants to American and Canadian cities over the period 1970 to 1990. Earlier expansion of education levels in the U.S., particularly in immigrant–intensive cities, lowered the relative employment success of its immigrants compared to those in Canada in the 1970s, while the more recent rapid expansion of education in Canada has reduced this cross–national difference and fostered convergence. Three potential aspects of these effects are examined: (i) higher native–born educational levels create or increase an immigrant skills gap, (ii) the impact on immigrants is magnified by the lower relevance (actual or perceived) of their credentials to employers? requirements, and (iii) associated shifts toward knowledge–based or professionalized occupations alters the credential validation processes in ways which disadvantage immigrants. These effects are conditional upon labor market institutions and processes. Data are drawn from U.S. and Canadian census microdata files for 1980/81 and 1990/91. The impact of educational change on immigrants is shown in inter–temporal decomposition analysis.
My purpose in this essay is to raise some questions about what is involved in
research on political violence. Since 1995 I have conducted ethnographic research in rural
villages throughout Ayacucho, the region of Peru most heavily affected by the war between
the guerrilla group Sendero Luminoso, the rondas campesinas (armed peasant patrols) and the
Peruvian armed forces. A key factor motivating my research was a desire to write against
the culture of violence arguments that were used to "explain" the war. The concept of a"culture of violence" or "endemic violence" has frequently been attributed to the Andean
region, particularly to the rural peasants who inhabit the highlands. I wanted to understand
how people make and unmake lethal violence in a particular social and historical context, and
to explore the positioning and responsibilities of an anthropologist who conducts research in
the context of war.
I extend the standard materialistic rational choice model of conflict to consider groups. In particular, I consider how the aggregate amount of conflict in society depends on which groups form and oppose each other. The study is motivated by empirical findings about the relationship between inequality, conflict, and economic development. I focus on a salient comparison: ethnic groups vs. social classes. I show that, contrary to the conventional wisdom, class conflict is not necessarily worse than ethnic conflict. In fact, ethnic conflict is general worse when the distribution of income is more equal. I also investigate the impact of the fact that while ethnicity is immutable, since there is social mobility, class is not. I show that the direct impact of mobility of conflict is as conventionally believed, but that there are important indirect effects which make the net effect ambiguous.
In an initial attempt to fill the previous void in the economic literature, this paper summarizes a series of studies, undertaken as part of a larger project sponsored by the Inter–American Development Bank, on the role of political economy factors in the making of exchange rate policy. While these factors are, of course, examined in conjunction with economic and macroeconomic variables, they have previously received little attention in their own. These political economy factors most notably include the role of interest groups, electoral competition, and election timing. This paper presents some simple analytical arguments, then summarizes evidence contained in other papers in this project.
As the People?s Republic of China (PRC or China) seeks to use law to address environmental problems, it faces daunting challenges, in terms both of the magnitude of environmental degradation it is experiencing and the capacity of its legal institutions. Pollution levels in the major cities in the PRC are among the highest on earth. Epidemiological studies indicate that the concentration of airborne particulates is two to five times the maximum level deemed acceptable by the World Health Organization. A noted World Bank study based on "conservative" assumptions estimates that as of the mid–1990s "urban air pollution costs the Chinese economy US$32.3 billion annually in premature deaths, morbidity, restricted activity, chronic bronchitis, and other heath effects." And new scholarly work suggests that the "health impacts fall disproportionately on women and children."
China?s lawmakers have not ignored these problems. The PRC has in recent years sought to enlist the law to address its environmental ills. In 1995 and then again in 2000, China undertook significant revisions of its principal air pollution law, while throughout the decade of the 1990s it promulgated discrete measures concerning coal production, acid rain, and associated matters. To date, these legal changes have at best had a minor impact on the Chinese environment, but as we know from Bruce Ackerman and William Hassler?s classic study of the making of air pollution law in the United States, "Clean Coal/Dirty Air," even in highly–developed legal systems, efforts through law to address such issues pose massive challenges.
This article examines the 1995 revision of the Air Pollution Prevention and Control Law (the 1995 APPCL). The struggles attending that revision warrant our attention not only because of the gravity of China?s air pollution, but for the revealing window they provide onto Chinese legislative development more generally. Through it, we can better understand the inner workings of what is, under the Chinese constitution, the supreme organ of state, the National People's Congress (NPC); the interface of the NPC with other organs of state, national and sub–national; and ultimately, the relationship of the Chinese state to its people. This has much to tell us about the particular limitations that prevented the 1995 APPCL from achieving more, the difficulties confronting overall efforts to deploy law to improve the Chinese environment, the growing politicization of environmental matters, and the challenges that the Chinese state faces as it attempts both to represent popular interest in more transparent governmental institutions and also to deepen its engagement in the international community as it prepares to accede to the World Trade Organization.
How are constitutional rules sustained? The general problem concerns how to structure the political game so that all the players – elected officials, the military, economic actors, and citizens – have incentives to respect the rules. In this paper, we investigate this problem in the context of how the institutions of federalism are sustained. A central design problem of federalism is how to create institutions that at once grant the central government enough authority to provide central goods and police the sub–units, but not so much that it usurps all of public authority. Using a game theoretic model of institutional choice, we show that, to survive, federal structures must be self–enforcing: the center and the states must have incentives to fulfill their obligations within the limits of federal bargains. Our model investigates the tradeoffs among the benefits from central goods provision, the ability of the center to impose penalties for non–compliance, and the costs of states to exit. We also show that federal constitutions can act as coordinating devices or focal solutions that allow the units to coordinate on trigger strategies in order to police the center. We apply our approach to a range of federations, including the United States under the Articles and the Constitution, modern China, and Russia.
The poor favor redistribution and the rich oppose it, but that is not all. Social mobility may make some of today's poor into tomorrow's rich and since redistributive policies do not change often, individual preferences for redistribution should depend on the extent and the nature of social mobility. We estimate the determinants of preferences for redistribution using individual level data from the US, and we find that individual support for redistribution is negatively affected by social mobility. Furthermore, the impact of mobility on attitudes towards redistribution is affected by individual perceptions of fairness in the mobility process. People who believe that the American society offers equal opportunities to all are more averse to redistribution in the face of increased mobility. On the other hand, those who see the social rat race as a biased process do not see social mobility as an alternative to redistributive policies.