# Research Library

2004
Frieden, Jeffry. 2004. “One Europe, One Vote?: The Political Economy of European Union Representation in International Organizations”.Abstract

Many Europeans support common European Union (EU) representation in international institutions. But such a pooling international political influence raises complex and controversial issues. A common European foreign policy position implies compromise among EU members. The pooling international representation thus requires, as with many internal EU policies, that member states weigh the potential benefits of a common policy against the potential costs a policy not to their liking. There can be a trade–off between the advantages of scale and the disadvantages overriding heterogeneous preferences. Simple spatial models help to make this point, to clarify the circumstances in which a common European international representation is most likely, and to explain who is most likely to support or oppose a pooling of European foreign policies.

Copelovitch, Mark. 2004. “Private Debt Composition and the Political Economy of IMF Lending”.Abstract

Over the last two decades, the International Monetary Fund has provided developing countries with over $400 billion in conditional loans, ranging in size from less than$10 million to over \$30 billion. What explains the significant variation in the amount and terms (conditionality) of these loans? Why do some countries get a better deal from the IMF, while others receive less Fund credit on more stringent terms? I argue that IMF lending behavior is driven by the interests of and interaction between three key actors: the IMF?s professional staff, the Fund?s five largest member-states (the "G-5"), and private international creditors. Each of these actors influences the IMF policymaking process, but none exercises complete control. Furthermore, these actors? preferences are not constant; rather, they vary over time and across cases based on the composition of a prospective Fund borrower?s private international debt. Changes in debt composition – specifically, differences in the instruments (commercial bank loans vs. bonds) and maturity (short– vs. long–term) of a borrower country?s external debt – shape the preferences of all three key actors over the size and terms of IMF lending packages. Using a new time–series cross–sectional dataset developed for this project, I find that differences in the amount and concentration of G–5 bank exposure, along with changes in the instruments and maturity of a borrower country?s private external debt, have had significant and substantive effects on the size and terms of short–term IMF loans from 1984–2003. Moreover, these effects are at least as large as those of other economic and political factors identified in the literature as important determinants of IMF lending. Ultimately, these results suggest the need to move beyond one–dimensional explanations of Fund policymaking that privilege a single economic or political variable in favor of a more complex and dynamic understanding of the political economy of IMF lending.

Working Paper 04–05, Weatherhead Center for International Affairs, Harvard University, October 2004.

Kelman, Herbert C. 2004. “Reconciliation as Identity Change: A Social-Psychological Perspective.” Oxford University Press. Publisher's VersionAbstract

This chapter focuses on reconciliation in the context of and in relation to an emerging or recently completed process of conflict resolution. The cases that particularly inform my analysis are the Israeli–Palestinian conflict and other protracted conflicts between identity groups – such as those in Bosnia or Northern Ireland – that re characterized by the existence of incomplete, fragile peace agreements (cf. Rothstein, 1999a). I hope, however, that the analysis also has some relevance to reconciliation in postconflict situations – both those of recent origin, such as South Africa or Guatemala, and those of long standing, such as the German–Jewish or the Franco–German relationship in the wake of World War II. Clearly, there are differences in the nature of reconciliation processes as a function of the stage of the conflict and the time that has elapsed since the end of active hostilities, but such differences need to be accounted for in a comprehensive theory of reconciliation.

Juergensmeyer, Mark. 2004. “Is Religion the Problem?”.Abstract

In the rubble following the collapse of the World Trade Center towers in the violent assault of September 11 lies the tawdry remnants of religion?s innocence. In those brief horrifying moments our images of religion came of age. Religion was found in bed with terrorism. Whatever bucolic and tranquil notions we may have had were rudely replaced by those that were tough, political, and sometimes violent. Is this the fault of religion? Has its mask been ripped off and its murky side exposed–or has its innocence been abused? Is religion the problem or the victim?

Kaufman, Jason. 2004. “Rent-Seeking and Municipal Social Spending: Data from America's Early Urban-Industrial Age”.Abstract

The term "rent–seeking" refers to special interest group efforts to seek special benefits at little or no cost to themselves. Because government spending has the potential to create both costs and benefits for taxpayers, fiscal policy is commonly viewed as a primary arena of rent–seeking activity. At least five different theories of nineteenth–century American urban development fit this general rubric. Each theory predicts different winners and losers as well as different underlying strategies and distributions of interests incumbent upon municipal decision making. This study uses two–wave panel data on special interest group representation and municipal social spending to examine the validity of these different theories of rent–seeking. Though all such theories share in commonan emphasis on self–seeking, this study points to the role of competition between different sectors of the local economy as a motivating force for the formation and mobilization of spe–cial interest group organizations. This finding contrasts with those rent–seeking theories that predict widespread cooperation among communities and/or classes in pursuit of common goals. Suggestions for future research on this topic are offered as well.

Juergensmeyer, Mark. 2004. “A Report from Baghdad: How the U.S. is Losing the Peace”.Abstract

Iraq's new interim government has no time to lose. Though it was welcome news when the new Prime Minister, Iyad Allawi, announced that the militias of nine major political parties would disband and join the government's security forces by January 2005, this is only one of the monumental tasks and formidable obstacles that the new government faces. As I discovered in a recent visit to Baghdad, Iraq is in dire need of reconstruction–not only from the miseries of Saddam Hussein?s long dictatorship, but also from the failed policies of the one–year occupation by America's Coalition administration, which has left demoralization, humiliation, and a weak security and economic infrastructure in its wake.

Sadly, in the perception of many Iraqis, the US has taken on the ugly aura of a Saddam–like dictatorship. This means that the former CIA backing of Prime Minister Iyad Allawi will be a problem, as will any other ties that he and members of the new government have to America. Although he cannot delete the CIA support from his resume Allawi will need to demonstrate his independence.

Pictures from this trip can be found on: http://www.global.ucsb.edu

Rodrik, Dani. 2004. “Rule of Law, Democracy, Openness, and Income: Estimating the Interrelationships”.Abstract

We estimate the interrelationships among economic institutions, political institutions, openness, and income levels, using identification through heteroskedasticity (IH). We split our cross–national dataset into two sub–samples: (i) colonies versus non–colonies; and (ii) continents aligned on an East–West versus those aligned on a North–South axis. We exploit the difference in the structural variances in these two sub–samples to gain identification. We find that democracy and the rule of law are both good for economic performance, but the latter has a much stronger impact on incomes. Openness (trade/GDP) has a negative impact on income levels and democracy, but a positive effect on rule of law. Higher income produces greater openness and better institutions, but these effects are not very strong. Rule of law and democracy tend to be mutually reinforcing.

Domínguez, Jorge I. 2004. “The Scholarly Study of Mexican Politics”.Abstract

This essay reviews the state of the scholarly study of Mexican politics. It focuses on research on political change since 1990. It discusses the political origins of economic problems and policies, including the enactment of NAFTA and the 1994–95 financial panic. It assesses the decline of the PRI, the presidency, and official organized labor; the role of urban protest and the Zapatista insurgency; and the revitalization of Congress, the Supreme Court, and state governments. It synthesizes the principal analytical findings on parties, public opinion, and elections.

Kelly, Paul. 2004. “Shipwrecked in Arcadia: The Australian Experiment”.Abstract

The Australian story is best understood as a series of experiments. The first was highly problematic: the creation of a society from a collection of convicts and military officers. The second was uplifting: the formation of a new world democracy upon the oldest continent. And the third is audacious: a national reinvention of how Australia interprets itself and relates to the world. Of course, there are many other Australian experiments, so this list is not exhaustive. These experiments, however, have their origin in a fundamental question: What is Australia?s purpose? Is Australia to be defined forever as a museum to a bizarre historical accident–a bunch of Europeans, shipwrecked on the wrong side of the earth–or as a nation that renews itself to offer its own people and the world a more successful and enduring creation? This is the question I want to address in these lectures.

Ferguson, Niall. 2004. “Siegmund Warburg, the City and the Financial Roots of European Integration”.Abstract

The economic integration of Western Europe after the Second World War proceeded by a circuitous route. It began with the creation of a "Community" to regulate the production and pricing of coal and steel in six European states: West Germany, France, Italy, Belgium, the Netherlands and Luxembourg. The Treaty of Rome then created a"Common Market", formally prohibiting barriers on trade between these countries. Trade between them had been growing rapidly before the formation of this European Economic Community; it continued to grow thereafter—as did world trade generally. However, in other respects economic integration proceeded slowly. In agriculture the development of an integrated market was positively hindered by the persistence of national subsidies until a Common Agricultural Policy superseded these. In manufacturing, too, national governments continued to resist pan-European competition by subsidizing politically sensitive sectors or by imposing non-tariff barriers. Such practices were less frequently adopted in the case of services, but only because services were less easily traded across national boundaries even under conditions of perfect free trade. In short, national markets were not being integrated because they were not really being liberalized. The exception to this rule was financial services, one of which—the sale of long-term corporate and public sector bonds to relatively wealthy investors—became integrated in a quite novel way in the course of the 1960s.

Robinson, James A. 2004. “State Formation and Governance in Botswana”.Abstract

Our analysis begins with the puzzle: how did Botswana develop a legal–rational state? We suggest that three key interlinked factors were important. First, during the pre–colonial period the Tswana developed local states with relatively limited kingship or chiefship and with a political structure that was able to integrate people of other ethnic groups such as Kalanga. Second, facing the onslaught first of the Boers, next of the British South African Company, and finally of the Union of South Africa, Tswana political elites attempted to maintain a good measure of independence by defensively modernizing. (The Tswana were not unique in this British Africa, either in the types of political institutions they evolved, or in their desire to modernize. What is unique about Botswana is they way that local state elites were coordinated in the whole of colonial national territory, pursuing similar policies to fend off the most pernicious effects of colonialism.) Finally, the political elites in both local states before independence and the national state at independence heavily invested in the country?s most important economic activity, ranching. This gave them a strong incentive to promote rational state institutions and private property. Moreover, the integrative nature of traditional Tswana political institutions reduced the likelihood that alternative groups would aggressively contest the power of the new unitary state.

Herrera, Yoshiko Margaret. 2004. “Symposium: Discourse and Content Analysis”.

Reimers, Fernando M. 2004. “Teaching Global Values”.Abstract

That a group of young people in Iraq recently beheaded Nick Berg, a young American who was in that country working as an independent contractor rebuilding infrastructure, in front of a video camera while proclaiming ?God is Great? should give pause to all of us interested in global peace and civility. Not too long ago, the world was shocked by pictures of American guards treating Iraqi prisoners in the most degrading imaginable forms, in ways clearly counter to basic American and human norms of civility and counter to international conventions about the treatment of prisoners of war.

So that we do not dismiss the horror of these acts as ?casualties of war? we should remember that a few years ago Daniel Pearl, another young American, a journalist working in Pakistan, was beheaded in front of a video camera, as his captors also claimed ?God is Great?. It was the same claim about God?s Greatness that those who hijacked several airplanes made on September 11, 2001, as they slashed the throats of pilots and passengers, and crashed those airplanes against civilian and military targets taking the lives of the largest number of civilians not engaged in combat to die in a single act in recent American history.

These crimes against humanity are not limited to recent acts against Americans or Iraqis, they are the routine form of coercion used by those who choose to pursue their political goals at the margin of national and international legal frameworks, and they are also the forms of coercion used by States against their own citizens, and often against the citizens of other nations. The Rwandan genocide of 1994, the ethnic cleansing in Sudan, the religious wars in Yelwa Nigeria, and fifty years ago the Holocaust are too recent examples, in the scale of human history, of the capacity of humans to lose their humanity in consciously acting to physically take the lives of those whom they perceived as different.

Should we resign ourselves to accept that members of a species that has survived innumerable evolutionary challenges should come from time to time to seek to destroy each other because they came to share norms and values that made this acceptable? Human history offers abundant evidence of the capacity of our species to engage in massive efforts of destruction of human life. Our times are not the first in history in which groups sharing a set of cultural values killed other humans ?in the name of God?.

Desai, Mihir A. 2004. “Theft and Taxes”.Abstract

This paper analyzes the interaction between corporate taxes and corporate governance. We show that the characteristics of a taxation system affect the extraction of private benefits by company insiders. A higher tax rate increases the amount of income insiders divert and thus worsens governance outcomes. In contrast, stronger tax enforcement reduces diversion and, in so doing, can raise the stock market value of a company in spite of the increase in the tax burden. We also show that the corporate governance system affects the level of tax revenues and the sensitivity of tax revenues to tax changes. When the corporate governance system is ineffective (i.e., when it is easy to divert income), an increase in the tax rate can reduce tax revenues. We test this prediction in a panel of countries. Consistent with the model, we find that corporate tax rate increases have smaller (in fact, negative) effects on revenues when corporate governance is weaker. Finally, this approach provides a novel justification for the existence of a separate corporate tax based on profits.

Zoel, Jean-Louis. 2004. “Is There an African Curse?”.Abstract

Africa is a puzzle to economists. Why is it so unsuccessful in partaking of development? In short, is there an African curse? This paper argues the answer is 'no'. Africa?s dismal economic performance is neither due to colonization nor to a different effect of the usual variables impacting on growth. It presents a rare combination of exogenous handicaps: poor soils, infectious diseases, small economies, landlockedness, declining rainfall, hasty independence, high dependency ratios, terms of trade losses. Dysfunctional governance is however the main factor, due to an exceptionally harmful post– independence history. This generated not only growth traps but a pervasive lack of trust too, including of Africans in themselves, a sort of ethical trap. Still, there are flames of hope and more Africans want a deeper change. They might prevail if democracy gives them a voice and a chance.

Working Paper 04–04, Weatherhead Center for International Affairs, Harvard University, September 2004.

Frankel, Jeffrey. 2004. “The UK Decision re EMU: Implications of Currency Blocs for Trade and Business Cycle Correlations”.Abstract

Working Paper 04–01, Weatherhead Center for International Affairs, Harvard University, February 2004.

Risse, Mathias. 2004. “What We Owe to the Global Poor”.Abstract

In September 2000, the U.N. General Assembly committed governments to eradicating extreme poverty. Endorsing several specific development goals, this historical document was called the Millennium Declaration, and has since become a reference point for development efforts across the globe.

Kapur, Devesh. 2004. “Where You Sit Is Where You Stand: The Behavioral Impact of Geography on International Organizations”.Abstract

The turn to "geography" in the social sciences has been evident in recent years, but the insights from this literature have largely bypassed scholarship on international organizations (IOs). Does geography matter at all for how IOs behave? We argue that, from both rationalist and constructivist approaches, there are theoretical reasons why location, controlling for power and interest, affects institutional design and performance. We suggest how preferences over location arise; what determines where IOs are located; and how and when location affects the design and performance of IOs. To assess the plausibility of our ideas, we provide empirical examples of the effect and importance of location, focusing on evidence from specific IOs; evidence regarding how location influences the staffing of IOs; and evidence on the clustering of IOs geographically.

Kapur, Devesh. "Where You Sit Is Where You Stand: The Behavioral Impact of Geography on International Organizations." Working Paper 04–06, Weatherhead Center for International Affairs, Harvard University, September 2004.

Robinson, James A. 2004. “White Elephants”.Abstract

Underdevelopment is thought to be about lack of investment, and many political economy theories can account for this. Yet, there has been much investment in developing countries. The problem has been that investment growth has not led to output growth. We therefore need to explain not simply underinvestment, but also the missallocation of investment. The canonical example of this is the construction of white elephants–investment projects with negative social surplus. In this paper we propose a theory of white elephants. We argue that they are a particular type of inefficient redistribution, which are politically attractive when politicians find it difficult to make credible promises to supporters. We show that it is the very inefficiency of such projects that makes them politically appealing. This is so because it allows only some politicians to credibly promise to build them and thus enter into credible redistribution. The fact that not all politicians can credibly undertake such projects gives those who can a strategic advantage. Socially efficient projects do not have this feature since all politicians can commit to build them and they thus have a symmetric effect on political outcomes. We show that white elephants may be preferred to socially efficient projects if the political benefits are large compared to the surplus generated by efficient projects.

Domínguez, Jorge I. 2004. “Why and How Did Mexico's 2000 Presidential Election Campaign Matter?”.Abstract

[in Jorge I. Domínguez and Chappell Lawson, eds., Mexico's Pivotal Democratic Election: Candidates, Voters, and the Presidential Campaign of 2000 (Stanford: Stanford University Press, 2004), pp. 321-344]

Mexico's 2000 presidential election campaign mattered. It closed the breach between Fox and old–line panistas, somewhat distrustful of his candicacy. It stimulated PAN voters to turn out at rates higher than those of PRI supporters on election day. It solidified the Cáredenas base in the PRD. It demoralized the PRI machinery. It detached voters from Labastida, leading them to vote for another candidate or to stay home on election day. It informed opposition strategic voters to support Fox. The proportion of voters influenced by the campaign to change their voting preference was at least two to three times greater than in U.S. presidential campaigns and at least twice Fox's margin of victory. In fact, the proportion of strategic voters alone gave Fox nearly all of his margin of victory.