Research Library

2003
Barro, Robert J, and Rachel M McCleary. 2003. “Religion and Economic Growth”.Abstract

Empirical research on the determinants of economic growth has typically neglected the influence of religion. To fill this gap, we use international survey data on religiosity for a broad panel of countries to investigate the effects of church attendance and religious beliefs on economic growth. To isolate the direction of causation from religiosity to economic performance, we use instrumental variables suggested by an analysis of systems in which church attendance and beliefs are the dependent variables. The instruments are variables for the presence of state religion and for regulation of the religion market, the composition of religious adherence, and an indicator of religious pluralism. We find that economic growth responds positively to religious beliefs, notably those in hell and heaven, but negatively to church attendance. That is, growth depends on the extent of believing relative to belonging. These results accord with a model in which religious beliefs influence individual traits that enhance economic performance. The beliefs are an output of the religion sector, and church attendance is an input to this sector. Hence, for given beliefs, more church attendance signifies more resources used up by the religion sector.

Moravcsik, Andrew. 2003. “Theory Synthesis in International Relations: Empirical not Metaphysical”.Abstract

Theory synthesis is not only possible and desirable but is constitutive of any coherent understanding of international relations as a progressive and empirical social science. Numerous interesting proposals exist for formulating and empirically testing multitheoretical propositions about concrete problems in world politics. Below the reader will find a set of basic principles that should underlie testable theory syntheses. Yet other contributors to this forum—Friedrich Kratochwil, Yosef Lapid, Iver Neumann, and Steve Smith—do not share this openness to theory synthesis; their views range from deep skepticism to outright rejection. The real issue between us is whether pluralism among existing theories ought to be preserved for its own sake, as these colleagues believe, or whether theories ought to be treated as instruments to be subjected to empirical testing and theory synthesis, as this author maintains.

Fox, Jonathan. 2003. “Are Religious Minorities More Militant than Other Ethnic Minorities?.” Alternatives Journal 28: 91-114.Abstract

Since the Iranian Revolution and especially since the end of the Cold War, religion has come to be associated with militancy. Conflicts between gropus of different religions are perceived by many as more intense. Similarly, religious groups involved in conflict are perceived as more militant. Ethnic conflicts that have fueled this perception include the Palestinian-Israeli conflict, the ethnic rebellions in Chechnya, Suda, Cyprus, India, and Indonesia and the civil wars in Lebanon, Afghanistan, and the former Yugoslavia. Fundamentalist movements, especially Islamic movements, have also contributed to this perception. This article uses data from the Minorities at Risk dataset (MAR), as well as data collected independently, to ascertain whether this perception is correct for ethnic conflicts. That is, the article asks: are ethnoreligious minorities really more militant than other ethnic minorities?

649_fox2003.pdf
Levitsky, Steven. 2003. “Argentina Weathers the Storm”.Abstract

The events of December 2001 seemed to transform Argentina?s international status from poster child to basket case. Throughout the 1990s, Argentina had been widely hailed as a case of successful market reform under democratic government. The radical economic transformation undertaken by the government of Carlos Saúl Menem had ended hyperinflation and restored economic growth, while the country enjoyed an unprecedented degree of democratic stability. Elections were free; civil liberties were broadly protected; and the armed forces, which had toped six civilian governments since 1930, largely disappeared from the political scene. Yet in late 2001, Argentina suffered an extraordinary economic and political meltdown. A prolonged recession and a severe financial crisis culminated in a debt default, a chaotic devaluation, and a descent into the deepest depression in Argentine history. A massive wave of riots and protests triggered a strong of presidential resignations, plunging the country into a profound crisis. For several months, Argentina teetered on the brink of anarchy. Widespread hostility toward the political elite raised the specter of a Peruú or Venezuelaústyle partyúsystem collapse. As the 2003 presidential election approached, many observers feared that the vote would be marred by violence or fraud.

Published in Journal of Democracy 14, no. 4 (October 2003): 152-166.

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Domínguez, Jorge I. 2003. “Boundary Disputes in Latin America”.Abstract

Since the start of 2000, five Latin American boundary disputes between neigboring states have resulted in the use of force, and two others in its deployment. These incidents involved ten of the nineteen independent countries of South and Central America. In 1995, Ecuador and Peru went to war, resulting in more than a thousand deaths and injuries and significant economic loss. And yet, by international standards the Americas were comparatively free from interstate war during the twentieth century. Latin Americans for the most part do not fear aggression from their neighbors. They do not expect their countries to go to war with one another.

Published in Peaceworks no. 50 (August 2003): 42. United States Institute of Peace.

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Braumoeller, Bear F. 2003. “Causal Complexity and the Study of Politics”.Abstract

Theories that posit complex causation, or multiple causal paths, pervade the study of politics but have yet to find accurate statistical expression. To remedy this situation I derive new econometric procedures, Boolean probit and logit, based on the logic of complexity. The solution provides an answer to a puzzle in the rational deterrence literature: the divergence between theory and case-study findings, on the one hand, and the findings of quantitative studies, on the other, on the issue of the role of capabilities and willingness in the initiation of disputes. It also makes the case that different methodological traditions, rather than settling into "separate but equal" status, can instead inform and enrich one another.

Published in Political Analysis 11, no. 3 (2003): 209-233.

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Subramanian, Ajantha. 2003. “Community, Class, and Conservation: Development Politics on the Kanyakumari Coast”.Abstract

In this paper, I trace the checkered history of ?community? in one south Indian locale — the coastal belt of Kanyakumari District –from its immediate post–independence role as a mechanism of state intervention in fisheries development, to its use in the 1990s in fisher claims to rights and resources and as a means for devolving conflict management to the local level. I show that the expansion of the state system, in part through development intervention, opened up a charged political arena where Kanyakumari?s fishers acquired new tools to negotiate political authority, redefine community, and articulate new rights of citizenship. Most importantly, I demonstrate that the development process furthered the mutual implication of state and community, a process which the state has been reluctant to acknowledge. I end the paper by arguing that the Tamilnadu State government?s neglect of marine conservation is a function of a bureaucratic sensibility that distinguishes ?state policy? from ?community politics,? and resource conservation from social justice, an attitude that has hardened with economic liberalisation. This perspective has prevented the government from taking seriously artisanal fisher demands for trawler regulation and from recognizing artisanal activism as a defense of both sectoral rights and of conservation.

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Levitsky, Steven. 2003. “Democracy Without Parties? Political Parties and Regime Change in Fujimori's Peru”.Abstract

Political parties are critical to Latin American democracy. This was demonstrated in Peru, where an atomized, candidate–centered party system developed after Alberto Fujimori?s 1992 presidential self–coup. Party system decomposition weakened the democratic opposition against an increasingly authoritarian regime. Since the regime collapsed in 2000, prospects for party rebuilding have been mixed. Structural changes, such as the growth of the informal sector and the spread of mass media technologies, have weakened politicians? incentive to build parties. Although these changes did not cause the collapse of the party system, they may inhibit its reconstruction.

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Pistor, Katharina, and Chenggang Xu. 2003. “Deterrence and Regulatory Failure in Emerging Financial Markets: Comparing China and Russia”.Abstract

Transition economies faced the formidable task of creating financial markets to ensure that enterprises gained access to external sources of funds under circumstances that were unfavorable for such markets to take off. The two major obstacles for financial market development we identify in this paper are highly incomplete law and the absence of reliable company specific information. We argue that in light of these obstacles standard law enforcement practices, including deterrence and reactive law enforcement by courts, and ex ante screening and proactive law enforcement by regulators are not effective. To jumpstart financial markets under these circumstances, other avenues have to be explored. We suggest that China, but not Russia, has been quite successful in seeking such alternatives. We identify the decentralized process of selecting companies for listing on major stock exchanges as a means for collecting company specific information that cannot be easily standardized and would therefore remain unexplored in a system that relied only on financial reporting and disclosure. While state agents involved in the selection process may have incentives to select lemons rather than viable firms for listing, we argue that the competition among different regions and ministries instilled by the so–called quota system has mitigated these dangers. By contrast, Russia?s reliance on a standard Western disclosure system with law enforcement by a combination of courts and regulators not paid off so far. On the contrary, uncertainties about the effectiveness of law enforcement and absence of reliable information have restrained financial market development. Evidence on lower co–movement of stock in China than in Russia lends support to our theoretical analysis.

660_pistorxu.pdf
Simmons, Beth A. 2003. “The Diffusion of Bilateral Investment Treaties: An Empirical Analysis”.Abstract

The process of globalization has been made possible by a series of technological, institutional, and policy changes over the course of the last several decades. As the introduction to this project suggests, governments have often made conscious policy adjustments in the face of innovations perceived as advantageous by competitors, new ideas of policy success, and sometimes as the result of explicit or implicit political pressures from powerful governments or international institutions.

A very important part of this process involves government choices to alter the international legal structure in which economic transactions take place. The most salient accomplishments in the development of an international legal structure to further economic liberalization has clearly been in the trade of goods and services, where the World Trade Organization commands a focal presence. In the monetary and exchange rate area, a growing number of governments have committed themselves through Article VIII of the International Monetary Fund?s Articles of Agreement to keep their current accounts free from restrictions, assuring traders and lenders that hard currencies will be made available to pay for imports and service international debts.

Interestingly, there has been very little multilateral development of the legal rules surrounding international investment, and in particular foreign direct investment (FDI). Nevertheless, such investment has grown substantially over the past several decades. According to the United Nations, total foreign direct investment inflows peaked at about 1,450 billion in 2000, before falling back to $735.1 billion in 2001. The growth in global FDI has far outstripped both world GDP and world trade growth. But direct investments are highly skewed geographically: developed countries account for over 93 per cent of outflows and 68 percent of inflows, and these shares have not changed too drastically over the past decade.

The primary legal innovation in the area of foreign direct investment in the post–world war two period has been the proliferation of bilateral agreements that seek to make explicit the contractual arrangements under which a firm invests in a local jurisdiction. Bilateral investment Treaties (BITs) are defined as an agreement establishing the terms and conditions for private investment by nationals and companies of one country in the jurisdiction of another. They are negotiated between governments precisely to create a legal environment to encourage foreign direct investment, typically in those jurisdictions that find it difficult to credibly commit to treat foreign capital in ways that are perceived by investors as transparent, fair, and predictable. These agreements are a way to tie the hands of the host country by agreeing to a wide range of pro–investor terms. By surrendering part of its legal sovereignty – notably the right to use its own courts to adjudicate any disagreements that may arise from a contract to invest – developing countries hope to convince foreign firms that their investments will be safe and sound.

As such, BITs should be understood as a part of the broader neo–liberal project to encourage the free flow of goods, services, capital, and ideas across national borders. They typically include provisions requiring investing nationals of the BIT partner to be treated as well as national firms or as well as the most favored foreign firms (MFN treatment); establish limits on expropriations of investments and require compensation when it occurs; and guarantee investors? right to transfer funds into and out of the country using a market rate of exchange. Sometimes these agreements also explicitly prohibit "performance requirements" on the part of foreign investors, though such clauses are more typically found in US rather than European agreements. Thus, we view these agreements as consistent with the market–oriented trend the editors of this volume have identified.

This article seeks to explain why BITs have proliferated over time. The popularity of BITs is puzzling when contrasted with the collective resistance developing countries have shown toward pro–investment principles under customary international law. Our central contention is that bilateral investment treaties intensify the inter–state competition for foreign investment. Because signing a BIT gives a state an advantage in this competition we expect the probability of acceptance of a BIT by a state to increase when rival states sign such a treaty. The model we have in mind is squarely consistent with the competitive models laid out in the introductory chapter to this project.

The article is organized as follows. The first section describes the BITs terrain in some detail: the history, rationale, and spread of these bilateral arrangements over time. The second section presents a model of competition for investment that could lead to the pattern of treaty diffusion we observe. In this model, one country exogenously "breaks ranks" and agrees to investors terms in order to enjoy the benefits of investment inflows. While competitors may not have preferred to do so, BITs effectively create a negative externality by presenting the prospect of diverting capital to hosts who agree to BITs. One obvious way to mitigate this outcome is to enter into a BIT as well. We entertain the possibility of more sociological explanations which may be plausible in explaining some investment treaties witnessed in more recent years.

The third section reviews the evidence of competitive diffusion. Competitive pressures for BIT proliferation are consistent with the data, but even some of the non–diffusion influences on the pattern of BITs suggest the broader reputational story we develop is apt. While socialization influences appears to be present in recent years, the most important explanations for the growing web of bilateral arrangements are those that postulate rational responses to the globalization of capital.

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Rodrik, Dani. 2003. “Discovering El Salvador's Production Potential”.Abstract

Part of a report on El Salvador's economic strategy.

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Whyte, Martin K. 2003. “Distributive Justice Issues and the Prospects for Unrest in China”. Download PDF

Fox, Jonathon. 2003. “Do Muslims Engage in More Domestic Conflict Than Other Religious Groups?”.Abstract

This article examines the validity of the stereotypical idea which is not endorsed here, that Muslim groups are more violent than groups of other religions, using data on domestic conflict from 1950 to 1996 from the State Failure dataset. The theories of Islam and violence in the literature can be divided into three categories: those that say Muslims in general are more violent, those that say certain Muslims are more violent, and those that say Muslims are no more violent that other religious groups. The results show that while on some measures Muslim groups are more violent that other groups, on others they are not. That is, while on one measure Muslim groups show the highest levels of violence, on other measures, Christians and Buddhist groups score the highest. Thus, while there is some evidence that Musclim groups are more violent, it is not conclusive and is certainly not enough to support the stereotype of the Islamic militant.



Civil Wars, Vol.6, No. 1 (Spring 2003), pp.27-46

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Frankel, Jeffrey. 2003. “Experience of and Lessons from Exchange Rate Regimes in Emerging Economies”.Abstract

This paper was written for Monetary and Financial Cooperation in East Asia, Macmillan Press, 2003, in consultation with the Regional Economic Monitoring Unit of the Asian Development Bank, and Takatoshi Ito and Yung Chul Park, coordinators of the ADB core study on exchange rate arrangements. The author would like to thank Sergio Schmukler for preparing Table 3.

The paper reviews recent trends in thinking on exchange rate regimes. It begins by classifying countries into regimes, noting the distinction between de facto and de jure regimes, but also noting the low correlation among proposed ways of classifying the latter. The advantages of fixed exchange rates versus floating are reviewed, including the recent evidence on the trade–promoting effects of currency unions. Frameworks for tallying up the pros and cons include the traditional Optimum Currency Area criteria, as well as some new criteria from the experiences of the 1990s. The Corners Hypothesis may now be "peaking" as rapidly as it rose, in light of its lack of foundations. Empirical evidence regarding the economic performance of different regimes depends entirely on the classification scheme. A listing of possible nominal anchors alongside exchange rates observes that each candidate has its own vulnerability, leading to the author?s proposal to Peg the Export Price (PEP). The concluding section offers some implications for East Asia.

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Desai, Mihir A. 2003. “The Fiscal Impact of High Skilled Emigration: Flows of Indians to the U.S.”.Abstract

Easing immigration restrictions for the highly skilled in developed countries portend a future of increased human capital outflows from developing countries. The myriad consequences of these developments for developing countries include the direct loss of the fiscal contributions of these highly skilled individuals. This paper analyzes the fiscal impact of this loss of talent for a developing country by examining human capital flows from India to the U.S. The escalation of the emigration of highly skilled professionals from India to the U.S is examined by surveying evidence on the changing nature of the Indian–born in the U.S. during the 1990s. The loss of talent to India during the 1990s was dramatic and highly concentrated amongst the prime–age work force, the highly educated and high earners. In order to estimate the fiscal losses associated with these emigrants, this paper first estimates what these emigrants would have earned in India, and then integrates the resulting counterfactual distributions with details of the Indian fiscal system to estimate fiscal impacts. Two distinct methods to estimate the counterfactual earnings distributions are implemented: a translation of actual U.S. incomes in purchasing power parity terms and an income simulation based on a jointly estimated model of Indian earnings and participation in the workforce. The PPP methods indicate that the foregone income tax revenues associated with the Indian–born residents of the U.S. comprise one–third of current Indian individual income tax receipts. Depending on the method for estimating expenditures saved by the absence of these emigrants, the net fiscal loss associated with the U.S. Indian–born resident population ranges from 0.24% to 0.58% of Indian GDP in 2001.

634_desaiworkingpaper03-01.pdf

WCFIA Working Paper 03–01, January 2003.

Levitsky, Steven. 2003. “From Labor Politics to Machine Politics: The Transformation of Party-Union Linkages in Argentine Peronism, 1983?1999”.Abstract

The Argentine (Peronist) Justicialista Party (PJ)** underwent a far–reaching coalitional transformation during the 1980s and 1990s. Party reformers dismantled Peronism?s traditional mechanisms of labor participation, and clientelist networks replaced unions as the primary linkage to the working and lower classes. By the early 1990s, the PJ had transformed from a labor–dominated party into a machine party in which unions were relatively marginal actors. This process of de–unionization was critical to the PJ?s electoral and policy success during the presidency of Carlos Menem (1989–99). The erosion of union influ–ence facilitated efforts to attract middle–class votes and eliminated a key source of internal opposition to the government?s economic reforms. At the same time, the consolidation of clientelist networks helped the PJ maintain its traditional work–ing– and lower–class base in a context of economic crisis and neoliberal reform. This article argues that Peronism?s radical de–unionization was facilitated by the weakly institutionalized nature of its traditional party–union linkage. Although unions dominated the PJ in the early 1980s, the rules of the game governing their participation were always informal, fluid, and contested, leaving them vulner–able to internal changes in the distribution of power. Such a change occurred during the 1980s, when office–holding politicians used patronage resources to challenge labor?s privileged position in the party. When these politicians gained control of the party in 1987, Peronism?s weakly institutionalized mechanisms of union participation collapsed, paving the way for the consolidation of machine politics–and a steep decline in union influence–during the 1990s.

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Moghadan, Assaf. 2003. “A Global Resurgence of Religion?”.Abstract

In recent years and decades, a widespread assumption that the world is experiencing a global rise of religion has persisted. Yet, the hypothesis of a "global resurgence of religion" has not been tested by means of empirical evidence. This study uses statistical time series and crosscountry data to test the hypothesis of "a global religious resurgence," and to assess its scope.

To address this question, the study examines global trends in religious adherence, and measures change of religious behavior and values over time in a multitude of countries spanning across six continents. The study identifies seven criteria by which the degree of religiosity among a certain population can be measured, using time–series and cross–country data. The study also examines other global religious trends, including a comparative overview over the relationship between religion and state in most countries, scanning variables such as the performance of religious parties in elections; preferential treatment of religions; countries with an official state religion; references to religion in constitutions; and countries under Sharia law.

The study concludes that there is ample evidence that the argument of a "global resurgence of religion" can largely be sustained, with the notable exception to this trend being the postindustrial countries—where the trend towards secularization itself, however, is far from consistent.

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Simmons, Beth A. 2003. “Globalization and Policy Diffusion: Explaining Three Decades of Liberalization”.Abstract

One of the most important developments over the past three decades has been the spread of liberal economic ideas and policies throughout the world. These policies have affected the lives of millions of people, yet our most sophisticated political economy models do not both temporally and spatially. We hypothesize that this clustering might be due to processes of policy diffusion. We think of diffusion as adequately capture influences on these policy choices. Evidence suggests that the adoption of liberal economic practices is highly clustered resulting from one of two broad sets of forces: one in which mounting adoptions of a policy alter the benefits of adopting for others and another in which adoptions provide policy relevant information about the benefits of adopting. We develop arguments within these broad classes of mechanisms, construct appropriate measures of the relevant concepts, and test their effects on liberalization and restriction of the current account, the capital account, and the exchange rate regime. Our findings suggest that domestic models of foreign economic policy making are insufficient. The evidence shows that policy transitions are influenced by international economic competition as well as the policies of a country's sociocultural peers. We interpret the latter influence as a form of channeled learning reflecting governments' search for appropriate models for economic policy.

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Frankel, Jeffrey. 2003. “Globalization and the Environment”.Abstract

Fears that globalization hurts the environment are not well–founded. A survey reveals little statistical evidence, on average across countries, that openness to international trade undermines national attempts at environmental regulation through a "race to the bottom" effect. If anything, favorable "gains from trade" effects dominate, for measures of air pollution such as SO2 concentrations. Perceptions that WTO panel rulings have interfered with the ability of individual countries to pursue environmental goals are also poorly informed. Recent rulings have in fact confirmed that countries can enact environmental measures, even if they affect trade and even if they concern others? Processes and Production Methods (PPMs), provided the measures do not discriminate among producer countries.

People care about both the environment and the economy. As real incomes rise, their demand for environmental quality rises. This translates into environmental progress under the right conditions–democracy, effective regulation, and externalities that are largely confined within national borders and are therefore amenable to national regulation. Increasingly, however, environmental problems spill across borders. Global externalities include climate change and ozone depletion. Economic growth alone will not address such problems, in a system where each country acts individually, due to the free rider problem. Multilateral institutions are needed, and national sovereignty is the obstacle, not the other way around.

673_frankel_final.pdf

WCFIA Working Paper 03-02, May 2003.

Rodrik, Dani. 2003. “Growth Strategies”.Abstract

This is an attempt to derive broad, strategic lessons from the diverse experience with economic growth in last fifty years. The paper revolves around two key arguments. One is that neoclassical economic analysis is a lot more flexible than its practitioners in the policy domain have generally given it credit. In particular, first–order economic principles–protection of property rights, market–based competition, appropriate incentives, sound money, and so on–do not map into unique policy packages. Reformers have substantial room for creatively packaging these principles into institutional designs that are sensitive to local opportunities and constraints. Successful countries are those that have used this room wisely. The second argument is that igniting economic growth and sustaining it are somewhat different enterprises. The former generally requires a limited range of (often unconventional) reforms that need not overly tax the institutional capacity of the economy. The latter challenge is in many ways harder, as it requires constructing over the longer term a sound institutional underpinning to endow the economy with resilience to shocks and maintain productive dynamism. Ignoring the distinction between these two tasks leaves reformers saddled with impossibly ambitious, undifferentiated, and impractical policy agendas.

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