The paper poses an interesting and important question: Have post–1980 "globalizers" performed better than "non-globalizers"? The authors answer the question affirmatively, but only by applying a suitably arbitrary set of selection criteria to their sample of countries.
I address the issue principal–agent relationships in the IMF from the perspective of attempting to understand the IMF as an international institution. However, this issue is also vital in current policy debates about reform of the IMF. Participants in these debates seem torn between calling the IMF a "runaway agency" and a "U.S. pawn" (Sanger 1998). The Economist reports that "the institution is widely viewed as the handmaiden of America?s Treasury Department" (Economist, 29 July 2000, 66). The report of the U.S. IFI Advisory Commission argues that if "the G–7 finance ministers can agree on a policy that they wish to pursue, for whatever reason, they can use the IMF as the instrument of that policy." Jeffrey Sachs, one of the members of that commission and a supporter of its conclusions, argues that the IMF is the instrument of a few rich governments (Financial Times, 25 September 2000). But in his statements as part of the IFI Advisory Commission, Sachs repeatedly raised questions about the public scrutiny and democratic accountability of the Fund, implying that the Fund bureaucracy acts without adequate political oversight. Clearly, both viewpoints cannot be correct – the Fund cannot simultaneously be an out–of–control bureaucracy and slave to its political masters. Only careful consideration of actual principal–agent relationships will bring clarity to this debate.
The threat to monetary policy from the electronic revolution in banking is the possibility of a decoupling' of the operations of the central bank from markets in which financial claims are created and transacted in ways that, at some operative margin, affect the decisions of households and firms on such matters as how much to spend (and on what), how much (and what) to produce, and what to pay or charge for ordinary goods and services. The object of this paper is to discuss how this possibility arises and what it implies, to dismiss as unessential to the argument various extreme characterizations that have arisen in the recent debate on this issue (for example, that no one will use money for ordinary economic transactions), and to address the specific arguments on the issue offered by Charles Goodhart, Charles Freedman and Michael Woodford.
Thus there is a discrepancy between the expectation of specialists on terrorism and the policy outcome of the U.S. domestic preparedness program. The most common explanation for such a discrepancy is that policymakers are behaving illogically, either out of ignorance or because they harbor ulterior motives (i.e., personal or institutional interests). Explanations of this sort are particularly favored by terrorism specialists. In this paper I argue that there is another explanation for the discrepancy: The policy outcome resulted from a mode of analysis that the substantive specialists do not perform. Put differently and more generally, a policy prescription that is illogical according to one analytic model of a problem may be perfectly logical according to another. The substantive experts on terrorism adhere to an analytic model known as, for lack of a better term "terrorism studies". Its hallmark is a focus on the practice and especially the practitioners of terrorism. In social–psychological terms, terrorism studies is an internal approach to prediction because it focuses on the constituents of the specific problem rather than on the broad distribution of possible outcomes. Thus, using terrorism studies as one's analytical model, it is hard to find a rational explanation for the origin of the U.S. domestic preparedness program.
We define a country's technology as a triple of eficiencies: one for unskilled labor, one for skilled labor, and one for capital. We find a negative cross–country correlation between the eficiency of unskilled labor and the eficiencies of skilled labor and capital. We interpret this finding as evidence of the existence of a World Technology Frontier. On this frontier, increases in the eficiency of unskilled labor are obtained at the cost of declines in the eficiency of skilled labor and capital. We estimate a model in which firms in each country optimally choose from a menu of technologies, i.e. they choose their technology subject to a Technology Frontier. The optimal choice of technology depends on the country's endowment of skilled and unskilled labor, so that the model is one of appropriate technology. The estimation allows for country–specific technology frontiers, due to barriers to technology adoption. We find that poor countries tend disproportionately to be inside the World Technology Frontier.
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.
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 study the implications of the trade–off between child quality and child quantity for the efficiency of the rate of population growth. We show that if quantity and quality are inversely related then, even in the case of full altruism within the family, population growth is inefficiently high, if the family does not have, or does not choose to use, compensating instruments (for example, bequests or savings are at a corner). In non–altruistic models this trade–off certainly generates a population problem. We therefore prove that the repugnant conclusion is not only repugnant, it may be inefficient. Moreover, we cannot expect intra–family contracting to resolve the inefficiency since it involves contracts which are not credible.
Who will provide for America’s children, elderly, and working families? Not since the 1930s has our nation faced such fundamental choices over how to care for all its citizens. Now, amid economic prosperity, Americans are asking what government, business, and nonprofit organizations can and can’t do—and what they should and shouldn’t be asked to do. As both political parties look to faith-based organizations to meet material and spiritual needs, the center of this historic debate is the changing role of religion. These essays combine a fresh perspective and detailed analysis on these pressing issues. They emerge from a three-year Harvard Seminar sponsored by the Center for the Study of Values in Public Life that brought together scholars in public policy, government, religion, sociology, law, education, and nonprofit leadership. By putting the present moment in broad historical perspective, these essays offer rich insights into the resources of faith-based organizations, while cautioning against viewing their expanded role as an alternative to the government’s responsibility. In Who Will Provide? community leaders, organizational managers, public officials, and scholars will find careful analysis drawing on a number of fields to aid their work of devising better partnerships of social provision locally and nationally. It was named a Choice Outstanding Academic Book of 2001.
During the nineteenth century most Western societies extended voting rights, a decision that led to unprecedented redistributive programs. We argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution. Political transition, rather than redistribution under existing political institutions, occurs because current transfers do not ensure future transfers, while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution. Our theory also offers a novel explanation for the Kuznets curve in many Western economies during this period, with the fall in inequality following redistribution due to democratization.
This landmark theoretical book is about the mechanisms by which special
interest groups affect policy in modern democracies. Defining a special
interest group as any organization that takes action on behalf of an
identifiable group of voters, Gene Grossman and Elhanan Helpman ask:
How do special interest groups derive their power and influence? What
determines the extent to which they are able to affect policy outcomes?
What happens when groups with differing objectives compete for
influence?The authors develop important theoretical tools for studying
the interactions among voters, interest groups, and politicians. They
assume that individuals, groups, and parties act in their own
self-interest and that political outcomes can be identified with the
game-theoretic concept of an equilibrium. Throughout, they progress
from the simple to the more complex. When analyzing campaign giving,
for example, they begin with a model of a single interest group and a
single, incumbent policy maker. They proceed to add additional interest
groups, a legislature with several independent politicians, and
electoral competition between rival political parties. The book is
organized in three parts. Part I focuses on voting and elections. Part
II examines the use of information as a tool for political influence.
Part III deals with campaign contributions, which interest groups may
use either to influence policy makers’ positions and actions or to help
preferred candidates to win election.
Paper presented at the PIEP conference in November 2000. Download PDF
A 500–pound tuna is caught off the coast of New England or Spain, flown thousands of miles to Tokyo, sold for tens of thousands of dollars to Japanese buyers…and shipped to chefs in New York and Hong Kong? That's the manic logic of global sushi.
This paper compares retrospective and prospective analyses of the effect of flip charts on test scores in rural Kenyan schools. Retrospective estimates that focus on subjects for which flip charts are used suggest that flip charts raise test scores by up to 20 percent of a standard deviation. Controlling for other educational inputs does not reduce this estimate. In contrast, prospective estimators based on a study of 178 schools, half of which were randomly selected to receive charts, provide no evidence that flip charts increase test scores. One interpretation is that the retrospective results were subject to omitted variable bias despite the inclusion of control variables. If the direction of omitted variable bias were similar in other retrospective analyses of educational inputs in developing countries, the effects of inputs may be even more modest than retrospective studies suggest. Bias appears to be reduced by a differences–in–differences estimator that examines the impact of flip charts on the relative performance of students in flip chart and other subjects across schools with and without flip charts, but it is not clear that this approach is applicable more generally.
European Economic Review, 44, 683-693Regimes controlled by a rich elite often collapse and make way for democracy amidst widespread social unrest. Such regime changes are often followed by redistribution to the poor at the expense of the former elite. We argue that the reason why the elite may have to resort to full–scale democratization, despite its apparent costs to themselves, may be that lesser concessions would be viewed as a sign of weakness and spur further unrest and more radical demands. The elite may therefore be forced to choose between repression and the most generous concession, a transition to full democracy.
More than fifty–five years ago,in February 1948, the British historian Lewis Namier (1888 –1960) delivered a lecture commemorating the centennial of the European revolution of 1848. His lecture has been published many times since then as "1848: Seed–plot of History," in, among other places,a volume titled Vanished Supremacies. Namier's choice of 1848 as a point of departure was well founded. There is a tired cliché that 1848 was a turning point in history when history failed to turn, but that is wrong. The year 1848 saw the first European revolutions: France was at the center, and there were also revolutions in Palermo, Naples, Vienna, Berlin, Buda, and Poznañ, to name a few. It was also the year of nationalist revolutions in Central Europe and the year of publication of The Communist Manifesto, which predicted that an international proletarian revolution would abolish capitalism, the state, nations, and nationalism. In 1848,as Kathleen Burk writes in her study of A.J.P.Taylor, the Austrian, or Habsburg, Empire "was a German as well as a Balkan Power,the keystone of the Concert of Europe;there was the German nation, but no Germany; there were Italian states, some of which belonged to the Austrian Empire, and two Italian kingdoms, but no Italy; France was still perceived by all the others as the most powerful,or at least the most threatening, of the continental Powers; and Russia was predominantly a European,not an Asiatic, Power ...."
Nixon was not the only one who went to China; Ronald McDonald is there now, too. McDonald's triumphed — in a cultural zone where many adults think fried beef patties taste bizarre — by catering to China's pampered only children, the so–called little emperors and empresses. The "Golden Arches" have become part of the landscape of Beijing and Hong Kong. But is McDonald's trampling local culture in the name of a bland, homogeneous world order? Not really. Global capitalism pushes one way, and local consumers push right back. Herewith, a parable of globalization.Published in Foreign Affairs 79, no. 3 (May/June 2000).
Why do some democracies choose economic policies that promote economic growth, while others seem incapable of prospering? Why are some polities able toprovide the public goods that are necessary for economic growth, while others turn the machinery of government toward providing private goods? Why are some countries able to make long term credible policy commitments, while others cannot? In what follows, we present a theory that argues that the diversity of economic policies is rooted in the diversity of democratic institutions in each country. Each polity, according to the divisions and necessities of its society chooses a set of democratic institutions to resolve its basic political problems. These institutions define a sequence of principal–agent relationships (Madison, Dahl 1967), commonly numbering at least three. First, the sovereign people delegate decision–making power (usually via a written constitution) to a national legislature and executive. The primary tools that the people retain in order to ensure appropriate behavior on the part of their representatives are two: the power to replace them at election time; and the power to set the constitutional rules of the political game. A second delegation of power occurs when the details of the internal organization of the legislature and executive are settled. This process entails the creation of ministerial positions, of committees, and of agenda control mechanisms. Here too constitutional regulations of the relationship between the legislature and the executive (is the legislature dissoluble? can cabinet ministers sit in the legislature?) come into play. Third, the legislature and the executive delegate to various bureaus and agencies to execute the laws. In this delegation, administrative procedures and law set the terms of the delegation.
On March 23, 1983, President Ronald Reagan shocked the national security establishment by calling upon the nation's scientific community, "who gave us nuclear weapons, to turn their great talents to the cause of mankind and world peace: to give us the means of rendering these weapons impotent and obsolete." Seventeen years have passed since that speech, and the United States has spent more than $60 billion trying to develop a defense against ballistic missiles. The Strategic Defense Initiative (SDI, or "Star Wars") and its successors have cost more than twice as much as the Manhattan Project (in constant dollars), but these programs have yet to produce a single workable weapon. This "achievement" is probably a record in the annals of defense procurement: never has so much been spent for so long with so little to show for it. Explaining how this happened—and why—is the main aim of Frances Fitzgerald's Way Out There in the Blue: Reagan, Star Wars, and the End of the Cold War. The "Star Wars" saga, according to Fitzgerald, is the story of how the United States came to chase a chimera. For Fitzgerald, "Star Wars" illustrates "the extent to which our national discourse about foreign and defense policy is not about reality—or the best intelligence estimates about it—but instead a matter of domestic politics, history, and mythology."