In an effort to address this shortcoming, we develop in this article a model of political competition that seeks to capture important characteristics of political competition in underdeveloped polities. These characteristics include: 1. That the state is weak (Evans, Skocpol, and Rueschmeyer (1985); Evans (1995); Myrdal, Kohli, and Shu (1994)). That is, the state lacks a monopoly over the use of violence (Weber (1958)); the use of coercion is controlled by political ?lites. 2. That democratic institutions are weak. Political competition is not governed by the rules of elections. 3. That politicians compete for private rents, extracted from public revenues (Marcouiller and Young (1995)). 4. That politics is "personalistic". Because of charisma (Apter (1963)); a tradition of "big man" politics (Jackson and Rosberg (1982)); or the forces of cultural identity (Geertz (1963)), personal characteristics can be as important as issue stands in determining the appeal of politicians. To analyze political competition in political settings that share these characteristics, we develop a simple model of political competition in which two politicians compete to recruit tax–paying citizens into their respective political camps.
What is the optimal number of currencies in the world? Common currencies aspect trading costs and, thereby, the amounts of trade, output, and consumption. From the perspective of monetary policy, the adoption of another country?s currency trades offers the benefits of commitment to price stability against the loss of an independent stabilization policy. The nature of the trade depends on coñmovements of disturbances, on distance, trading costs, and on institutional arrangements such as the willingness of anchor countries to accommodate to the interests of clients.
This document is organized around "political" and "economic" institutions. We begin with the former, with a discussion of the role of the judicial system and of the separation of power followed by the electoral law and structure of parliament; and a discussion of crime prevention and criminal justice system. We then move to economic institutions; we focus on those that have to do with the bureaucracy and provision of social services; monetary and fiscal institutions, namely the Central Bank, the budget process and, especially important, the local/central government relationships.
We seek in our analysis to understand the forces that favor and oppose currency unions, that is, we extend the classic analysis of optimum currency areas from Mundell (1961). One consideration, not touched on in Mundell?s economic analysis, is that individual currencies are sometimes valued simply out of national pride. One would have expected these nationalistic concerns to be more intense for language than for money, yet most countries willingly use the language of another country, typically the one of a former colonial ruler. Given this acceptance of transplanted language, it is surprising how often people reject currency unions–which sometimes involve the use of another country's currency– simply on the grounds that important countries are supposed to have their own money.
We investigate how the number and size of local political jurisdictions in an area is determined. Our model focuses on the tradeoff between the benefits of economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. Using both cross–sectional and panel analysis, we find evidence of a significant tradeoff between economies of scale and racial heterogeneity. We find weaker tradeoffs between economies of scale and income or ethnic heterogeneity. That is, it appears that people are willing to sacrifice the most, in terms of economies of scale, in order to avoid racial heterogeneity in their jurisdiction.
Ch. 2 in John Stephens, Herbert Kitschelt, Peter Lange, and Gary Marks (eds.), Change and Continuity in Contemporary Capitalism. New York: Cambridge University Press, 1999, 36–69The internationalization and integration of capital markets has been the most significant change in the political economy of the industrialized countries over the past three decades. From the Great Depression to the Bretton Woods period, capital markets developed largely within national boundaries. Yet the past three decades have witnessed historically unprecedented growth in cross–border capital movements that have surpassed those of the late nineteenth century, often thought of as a golden age of international finance. Moreover, since World War II, the integration of capital markets has been far more rapid and complete among the industrialized countries than has the integration of markets for goods and services. No other area of the economy has been so thoroughly internationalized as swiftly as have capital markets since the 1970s.
The interactions between identity groups engaged in a protracted conflict lack the conditions postulated by Gordon Allport in The Nature of Prejudice (1954) as necessary if contact is to reduce intergroup prejudice. The article examines the Israeli–Palestinian conflict from this perspective. After summarizing the history of the conflict, it proposes that a long–term resolution of the conflict requires development of a transcendent identity for the two peoples that does not threaten the particularistic identity of each. The nature of the conflict, however, impedes the development of transcendent identity by creating a state of negative interdependence between the two identities such that asserting one group’s identity requires negating the identity of the other. The resulting threat to each group’s identity is further exacerbated by the fact that each side perceives the other as a source of some of its own negative identity elements, especially a view of the self as victim and as victimizer. The article concludes with a discussion of ways of overcoming the negative interdependence of the two identities by drawing on some or the positive elements in the relationship, most notably the positive interdependence between the two groups that exists in reality. Problem–solving workshops represent one setting for equal–status interactions that provide the parties the opportunity to "negotiate" their identities and to find ways of accommodating the identity of the other in their own identity.
During the past two decades or so, capital controls have been lifted, national capital markets have been liberalized and international capital markets have exploded among the advanced industrial economies and beyond. As major players with significant stakes in the smooth operation of international capital markets, the United States and Europe have common interests in the emergence of a regulatory framework that enhances market stability, minimizes systematic risks, and allows for the efficient operation of markets. Yet despite the growth in cross border capital movements, regulatory cooperation is at times plagued by differences in national approaches and preferences, difficulties coordinating rules where multiple regional or international organizations are involved, and regulators' reluctance to cooperate fully with foreign jurisdictions... A single chapter cannot do justice to the range of rules and agreements that have been made among the banking and securities regulators of Europe and America over the past decade. Rather than strive for exhaustiveness, this chapter selects three issue areas that illustrate particular dynamics of rule development: capital adequacy standards for internationally active banks; anti–money laundering efforts; and international accounting standards for foreign listings on local stock exchanges. There are two key dimensions that these cases illustrate: the problem of defection (which demands stronger rules of surveillance and sanction than mere coordination problems), and the issue of the scope of agreement (systematic problems demand multilateral solutions).
The purpose of this essay is to describe the recent internationalization of capital, and to explore the implications for the industrialized countries of the Organization for Economic Cooperation and Development (OECD). The first section describes capital controls under the Bretton Woods regime and their subsequent liberalization. Bretton Woods endorsed capital controls, but these were relaxed in the 1970s and virtually eliminated in the 1980s and 1990s in most OECD countries. The second section describes the increase in transnational capital movements, and the third reviews the evidence of capital market integration since the 1960s. The fourth section explores the consequences of more integrated capital markets on national politics and policy making, and the final section offers conclusions.
This chapter examines the role of international legal approaches to the settlement of territorial disputes. What are the conditions that make resort to negotiations inadequate for the settlement of a territorial dispute? Why do governments make legal commitments that bind their future behavior with respect to how a territorial agreement is to be resolved? That is, what conditions make a formal legal commitment to arbitrate a dispute an attractive alternative? And, finally, why do states sometimes actually go through with such commitments to submit to third–party review of their territorial claims? Motivating this study is the question of the role that international quasi–judicial processes can play in the resolution of territorial disputes among states. Previous research suggests that international law may play an important role in reducing the incidence of territorial disputes. Paul Huth (1996), for example, has found that clear legal agreements reduce the probability that a dispute will arise in the first place. By his estimate, some 142 border agreements were concluded between 1816 and 1990, and 126 of these were still in force and honored by both states in 1995 (Huth 1996, 92; see also Kocs 1995). If supranational authoritative rulings contribute to such agreements, then there are good reasons to expect them to make a positive contribution to settling the dispute peacefully.
In A Road Map to War: Territorial Dimensions of International Conflict edited by Paul F. Diehl. Vanderbilt University Press, January 1999.Download PDF
The focus of this paper is on interactive problem solving, an unofficial, academically–based, third–party approach to the resolution of international and intercommunal conflicts. The methods of interactive problem solving are applicable to a wide variety of conflicts and have indeed been applied in a number of protracted conflicts between identity groups around the world, including Cyprus, Sri Lanka, Bosnia, and Northern Ireland. My own focus, however, for some thirty years, has been on the Arab Israeli conflict and especially on the Israeli–Palestinian component of that conflict.
In this chapter, I examine the process of reconciliation within the framework of interactive problem solving, an approach to conflict resolution anchored in social–psychological principles. Interactive problem solving is a form of unofficial diplomacy, derived from the work of John Burton and epitomized by the microprocess of problem–solving workshops. These workshops are unofficial, private, confidential meetings between politically influential member of conflicting parties, designed to develop new insights into their conflict and new ideas for resolving it, which can then be infused into the political process within each community. My work in this genre has focused primarily on the Israeli–Palestinian conflict, but the approach can be – and has been – applied to other protracted conflicts between identity groups.
International Economic Review, 40, 209-230This paper provides a theory of strikes as part of a constrained efficient enforcement mechanism for an implicit contractual agreement. A firm possessing contemporaneously private information about demand engages in an enduring relationship with its work force. If the information becomes perfectly observable subsequently, then, modulo discounting, the first–best is implementable, but strikes are always off the equilibrium path. If the observations of the workforce are imperfect strikes occur in equilibrium. The dynamic contracting problem is modeled as a repeated game with imperfect monitoring. The equilibrium exhibits production inefficiency and incomplete insurance to mitigate the efficiencies caused by strikes.
I argue that the impact of development on the distribution of political power in society may create an incentive for a state to become 'predatory' and fail to promote economic development. I develop a model of endogenous policy choice where public investment, while socially productive, simultaneously increases the ability of agents outside the ruling group to contest political power. The model shows that ineffcient underinvestment (predatory behavior) tends to arise in societies where, (1) there are large benefits to holding political power, and which are, (2) well endowed which natural resources, (3) badly endowed with factors which are complementary to public investment, such as human capital, and (4) intrinsically unstable. I document the importance of the mechanism I propose in accounting for the behavior of actual predatory regimes.
This paper investigates private–interest, public–interest, and political–institutional theories of regulatory change to analyze state–level deregulation of bank branching restrictions. Using a hazard model, we find that interest group factors related to the relative strength of potential winners (large banks and small, bank–dependent firms) and losers (small banks and the rival insurance firms) can explain the timing of branching deregulation across states during the last quarter century. The same factors also explain congressional voting on interstate branch–ing deregulation. While we find some support for each theory, the private interest approach provides the most compelling overall explanation of our results.
From the Quarterly Journal of Economics 114 (November 1999): 1437-67Download PDF
In this paper we estimate a bargaining model of government formation in parliamentary democracies. We use the estimated structural model to conduct policy experiments aimed at evaluating the impact of institutional features of the bargaining environment on the type of coalitions that form (e.g., minority or majority) and on their relative stability.
Did the Cold War matter for US–Latin American relations? In many respects, the answer is no. The United States had faced military, political and economic competition for influence in the Americas from extracontinental powers before the Cold War, just as it did during the Cold War. The United States had pursued ideological objectives in its policy towards Latin America before, during, and after the Cold War. And the pattern of US defence of its economic interests in Latin America was not appreciably different during the Cold War than at previous times. From these singular perspectives, it is difficult to assert that the Cold War was a signficantly distinctive period of US–Latin American relations; it looked like 'more of the same'.Nonetheless, the Cold War emerges as significantly distinctive in U.S. relations with Latin America because ideological considerations acquired a primacy over U.S. policy in the region that they had lacked at earlier moments. From the late 1940s until about 1960, ideology was just one of the important factors in the design of U.S. policy toward Latin America. The victory and consolidation of the Cuban revolutionary government changed that. In its subsequent conduct of the key aspects of its policy toward Latin America, the U.S. government often behaved as if it were under the spell of ideological demons.
New light has recently been shed on the influence of fundamentalist Protestant orientations on educational attainment; such reexamination has revived debates over the material consequences of culture. In this paper, Darren Sherkat and Alfred Darnell consider the effect of parents' fundamentalist orientation on their childrens' educational attainment. Using data from the Youth Parent Socialization Panel Study, Sherket and Darnell divide the sample to show how the influence of parents' fundamentalism varies by gener of the child and by the youth's fundamentalism. They find that fundamentalist parents hinder the educational attainment of their nonfundamentalist children, and also that such parents are more supportive of male fundamentalist children's education that are non–fundamentalist parents.