This paper examines the relationship between culture and poverty, paying special attention to cultural diversity, economic development, and the challenges facing the reduction of poverty in a culturally complex world. Over the last several decades, anthropologists, sociologists, political scientists, and even economists have examined the relationship between culture and poverty in an international context, producing a remarkably diverse and in recent years increasingly sophisticated literature (Rao and Walton 2004). Yet the term “culture” has meant different things to different scholars, and part of our challenge is to assess those meanings against what we know about poverty and development. We cannot hope in these few pages to cover all this work, address all its complexities, or even summarize it faithfully. Instead, we cover a narrow but critical set of issues we find especially important for those attempting to reduce poverty or its consequences in the globalized world in which we live.
The symposium was held at the Center for European Studies, Harvard University April 11, 2007
Senior Harvard faculty, a top official from the European Commission, Weatherhead Fellows and some 50 participants from Harvard and neighboring schools gathered on April 11 for a half-day symposium to mark the 50th anniversary of the signing in 1957 of the Treaties of Rome—the foundation documents of the European Union. Speakers included the Directors of the two Centers, Jonathan Faull (Director General for Justice, Freedom and Security, European Commission), Karl Kaiser (Ralph I Strauss Visiting Professor), Peter A Hall (WCFIA and CES Faculty Associate), Richard Rosecrance (CES Affiliate), Katiana Orluc (CES Visiting Scholar), Giovanni Capoccia (Oxford University), Charles Maier (Leverett Saltonstall Professor of History), and Armando Barucco and Claude Rakovsky (Weatherhead Fellows). The symposium took the form of a keynote address by Jonathan Faull and two panels—the first addressing the EU’s structural arrangements and its relations with the US; the second addressing the question of the EU’s identity in a globalizing world with porous borders.
Peter Watkins is a 2006-2007 WCFIA Fellow. He is also Senior Civil Servant, Ministry of Defence, United Kingdom; Command Secretary, RAF Strike Command.
In the context of a small monetary DSGE model of the business cycle, this paper investigates the interrelationship between structural economic reform (modeled as the introduction of greater competition in the goods market) and monetary stability (captured by the dynamic stability of the resulting macroeconomic system). After making minor but plausible adjustments to the standard New Keynesian macroeconomic framework, the paper demonstrates that a conventional monetary policy framework, defined by adherence to the so–called Taylor principle, may – contrary to the received wisdom – fail to maintain macroeconomic and monetary stability. The likelihood of such failure increases as structural economic reform is introduced for two reasons: first, greater goods market competition narrows equilibrium mark–ups and thus the leverage monetary policy exerts over cyclical inflation developments; and, second, private sector expectations are subject to non–fundamental shocks that arise from the uncertainty surrounding the effectiveness of structural reform.
Explanations of the boom/bust economic cycle characteristic of emerging markets have emphasized the role of institutional weaknesses in the financial sector in creating macroeconomic instability. Testing this proposition using aggregate data is complicated by the difficulty of identifying banks' credit supply decisions independently of credit demand by the domestic non–financial private sector. In this paper, a panel of Argentine bank balance sheet data is used to investigate the cross–sectional variation in bank lending decisions in response to macroeconomic shocks. The emergence of systematic cross–sectional patterns suggests bank characteristics – and thus bank behavior – play an important role in transmitting macroeconomic shocks to emerging market economies.
This paper considers the effect of taxation on the location of foreign direct investment (FDI) and taxable income reported by multinational firms. Confidential affiliate–level data are used to compare the investment and income–reporting behavior of American–owned foreign affiliates. Ten percent higher tax rates are associated with 5.0 percent lower FDI, controlling for parent company and observable aspects of local economies, and 0.66 percent lower returns on assets, controlling for parent company and level of FDI. Tax effects are particularly strong within Europe, where ten percent higher tax rates are associated with 7.7 percent lower FDI and 1.4 percent lower returns on assets. Indirectly owned foreign affiliates exhibit even stronger tax effects, ten percent higher tax rates being associated with 15.3 percent lower FDI and 1.6 percent lower returns on assets. American firms finance a growing fraction of their foreign operations indirectly through chains of ownership, which now account for more than 30 percent of aggregate foreign assets and sales. Ownership chains are particularly concentrated among European affiliates. Since multinational firms from countries other than the United States face tax environments similar to those faced by indirectly owned affiliates of American companies, these results suggest a greater sensitivity of FDI to taxes for non–American firms. The results also suggest that European economic integration may have the effect of intensifying tax competition between European jurisdictions.
I feel honored to have been asked by my old friend Wang Gungwu to give a keynote speech in such distinguished company at this anniversary conference. Gungwu is one of the great scholars of the contemporary China field. I remember a remark made by my old Harvard teacher Yang Liansheng at a China Quarterly conference on history which I ran in 1964. (My goodness that was a long time ago!) Yang told Gungwu that his Chinese colleagues greatly admired his ability to use with equal facility the tools of both Western and Chinese historiography.
The subject I have chosen is "China in Political Transition," and I shall focus on succession politics. As everyone here today knows, China is at this very moment in the run–up to a most important political transition, succession at the very top of the Communist Party. How that succession process evolves will tell us a lot about the degree of institutionalisation that has taken place in the Chinese political system since the Cultural Revolution. It will also provide some insight into whether the new generation of leaders will be able to cooperate or whether they will continue to consider politics as a zero sum game.
Future historians may someday look back on the 1990s as the decade when Europeans began to view the European Union without illusions. Although the core of European integration has always been pragmatic, functional cooperation of a largely economic nature—trade liberalization, regulatory harmonization, financial openness—the project was assisted by the existence of a “permissive consensus” of favorable public opinion, which permitted centrist political parties to satisfy the economic demands of powerful producer groups while justifying their actions with arguments about the role of the EU in promoting regional democracy and peace. As a result, European political elites only rarely criticized the EU. In recent years more open skepticism has been voiced. The first part of this essay evaluates the views of five leading European statesmen and thinkers, found in their Spaak lectures at Harvard University, on this issue: Ralf Dahrendorf, Uffe Ellemann-Jensen, Roy Jenkins, George Papandreou and Renato Ruggiero. The second part evaluates the most serious of recent criticisms of the EU, namely that it is democratically illegitimate. Concern about the EU’s ‘democratic deficit’ is in fact misplaced. Judged against the practices of existing advanced industrial democracies, rather than an ideal plebiscitary or parliamentary democracy, the EU is legitimate. Its institutions are tightly constrained by constitutional checks and balances: narrow mandates, fiscal limits, super-majoritarian and concurrent voting requirements and separation of powers. The EU's appearance of exceptional insulation reflects the subset of functions it performs – central banking, constitutional adjudication, civil prosecution, economic diplomacy and technical administration. These are matters of low electoral salience commonly delegated in national systems, for normatively justifiable reasons. On balance, the EU redresses rather than creates biases in political representation, deliberation and output.
When social scientists talk about the adoption of new governance arrangements in a given policy area, their questions are most often functional: What will those new arrangements do better than the previous way of making policy? Yet politicians do not always, or even usually, pick policy solutions because they offer the best functional answer to a policy problem. Instead, they adopt solutions at a given time that advance their electoral or partisan interests as well as responding to a perceived policy problem (cf. Kingdon 1984). Thus, they not only want to do things (provide child care, increase economic development), but to do things that are politically useful (fortify their local political machine, distribute benefits to political supporters).
It in this light that I evaluate in this paper two of the most significant innovations in collaborative governance arrangements in Europe in the 1990s. The first is the 1993 French reform that created regional–level multi–partite institutions to develop proposals for regional education and training initiatives that aimed to spur private investment in human capital. The second is the institution of territorial pacts as the cornerstone of Italian development policy in the 1990s. The development pacts were to sponsor the participation of local secondary associations and politicians in proposing territorial development plans, with the goal of promoting ongoing cooperation among these actors at the territorial level. These reforms are especially significant because they took place in two unitary states with weak regional governments and weak traditions of corporatist policy–making. They were innovative, at least in form, because they attempted to build institutions of public/private collaboration to provide collective goods at a local level. As such, they simultaneously marked an attempt to break radically with the nature of past policy and with the institutions through which those policies had been designed. These were not equivalent to sectoral neocorporatist policies practiced especially widely in northern Europe (Lehmbruch 1984) both by virtue of the scope of private actors involved and of the delegation of policy autonomy to these actors. In terms of scope, they attempted to involve a wide range of local stakeholders, rather than monopolistic employers and unions. And in terms of policy autonomy, these new instances were empowered not merely to implement policies decided at the center, but to develop their own analyses of local problems and proposed responses to them. They were not merely bodies of decentralized implementation, but of decentralized policy design, with the institutions for designing policy moved away from national politicians and to local actors (among which politicians were just one, if still the primus inter pares).
The actual institutions have, so far, shown themselves to be quite heterogeneous. In this paper, I first summarize their experiences?both their political origins and their successes and failures in fulfilling the institutional mandate delegated to them. After reviewing the major developments in each institutional experiment, I draw parallels between the two ongoing experiments, focusing in particular on the organizational prerequisites for their success and the dilemmas they pose for public actors who would attempt to expand collaborative governance arrangements.
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.
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.