As the World Turns
Rational Dictators and the Killing of Innocents: Data from Stalin's Archives
Paul Gregory, Philipp Schröder & Konstantin Sonin
Journal of Comparative Economics, forthcoming
Abstract:
We posit a rational choice model of dictatorship to explain the tendency of dictators to repress innocent citizens. This model demonstrates that, when the quality of information about regime enemies is low, a rational dictator will knowingly kill and imprison citizens who are not real enemies. We use the formerly secret Stalin archives to test this proposition against the stylized facts of Stalin's three major repressions.
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Garett Jones & Marta Podemska Mikluch
George Mason University Working Paper, October 2010
Abstract:
Social science research has shown that intelligence is positively correlated with patience, while growth theory predicts that more patient countries will save more. In a closed economy, that means high average IQ countries will become more capital-intensive. In an open economy, high average IQ countries will hold a greater share of the world's widely-traded assets. We provide the first empirical evidence that in today's world, presumably somewhere between the closed-economy and open-economy benchmarks, both predictions hold true: Countries whose residents currently have the highest average IQs have higher capital-output ratios and higher ratios of U.S. Treasuries to nominal GDP.
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Genetic Distance and Income Difference: Evidence from Changes in China's Cross-Strait Relations
Ying Bai & James Kai-sing Kung
Economics Letters, forthcoming
Abstract:
Using the ending of the severance of ties between the Chinese mainland and Taiwan as a natural experiment, we show that relative but not absolute genetic distance from Taiwan has increased the income difference between pairs of Chinese provinces significantly.
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The Potato's Contribution to Population and Urbanization: Evidence from an Historical Experiment
Nathan Nunn & Nancy Qian
Quarterly Journal of Economics, forthcoming
Abstract:
We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the 18th and 19th centuries. According to our most conservative estimates, the introduction of the potato accounts for approximately one-quarter of the growth in Old World population and urbanization between 1700 and 1900. Additional evidence from within-country comparisons of city populations and adult heights also con rm the cross-country findings.
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Dynamics and Stagnation in the Malthusian Epoch
Quamrul Ashraf & Oded Galor
American Economic Review, forthcoming
Abstract:
This paper examines the central hypothesis of the influential Malthusian theory, according to which improvements in the technological environment during the pre-industrial era had generated only temporary gains in income per capita, eventually leading to a larger, but not significantly richer, population. Exploiting exogenous sources of cross-country variations in land productivity and the level of technological advancement, the analysis demonstrates that, in accordance with the theory, technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 CE.
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Why Have Economic Reforms in Mexico Not Generated Growth?
Timothy Kehoe & Kim Ruhl
NBER Working Paper, December 2010
Abstract:
Following its opening to trade and foreign investment in the mid-1980s, Mexico's economic growth has been modest at best, particularly in comparison with that of China. Comparing these countries and reviewing the literature, we conclude that the relation between openness and growth is not a simple one. Using standard trade theory, we find that Mexico has gained from trade, and by some measures, more so than China. We sketch out a theory in which developing countries can grow faster than the United States by reforming. As a country becomes richer, this sort of catch-up becomes more difficult. Absent continuing reforms, Chinese growth is likely to slow down sharply, perhaps leaving China at a level less than Mexico's real GDP per working-age person.
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The Slide to Protectionism in the Great Depression: Who Succumbed and Why?
Barry Eichengreen & Douglas Irwin
Journal of Economic History, December 2010, Pages 871-897
Abstract:
The Great Depression was marked by a severe outbreak of protectionist trade policies. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Just as the gold standard constraint on monetary policy is critical to understanding macroeconomic developments in this period, exchange rate policies help explain changes in trade policy.
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The structure of protection and growth in the late 19th century
Sibylle Lehmann & Kevin O'Rourke
Review of Economics and Statistics, forthcoming
Abstract:
Many papers have explored the relationship between average tariff rates and economic growth, when theory suggests that the structure of protection is what should matter. We therefore explore the relationship between economic growth and agricultural tariffs, industrial tariffs, and revenue tariffs, for a sample of relatively well-developed countries between 1875 and 1913. Industrial tariffs were positively correlated with growth. Agricultural tariffs were generally negatively correlated with growth, although the results are not robust. Revenue tariffs were not related to growth at all.
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Stephen Weymouth
Comparative Political Studies, forthcoming
Abstract:
What political institutions improve property rights? Building on the work of North and Weingast, this article argues that institutional checks on policy-making discretion ("veto players") improve the property rights of investors regarding the value of the domestic currency. Veto players constrain the ability of policy makers to opportunistically pursue policy that may lead to a depreciated domestic currency. The study offers some of the first large-sample evidence that check and balance institutions lower the risk of expropriation, using a direct measure of investors' revealed preferences as the dependent variable. In particular, evidence from 127 countries over the period 1975-2004 shows that the use of foreign currency as a store of value - a common hedge against domestic currency depreciation - decreases with the number of veto players in government. The findings are robust to multiple specifications, including instrumental variable models that exploit exogenous sources of institutional variation.
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Jeorge Álvarez, Ennio Bilancini, Simone D'Alessandro & Gabriel Porcile
Explorations in Economic History, forthcoming
Abstract:
In this paper we apply a model of early industrialization to the case of New Zealand and Uruguay in 1870-1940. We show how differences in agricultural institutions may have produced different development paths in two countries which were similar under many respects. While in New Zealand the active role of the Crown in regulating the land market facilitated access to land, in Uruguay land was seized by a small group of large landowners. Our model shows that land concentration may have negatively influenced industrialization and growth by impeding the formation of a large group of middle-income landowners and, as a consequence, the development of a domestic demand for basic manufactures. We support this view with a comparative analysis of agricultural institutions and industrial development in New Zealand and Uruguay.
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Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions
Dongwoo Yoo & Richard Steckel
NBER Working Paper, November 2010
Abstract:
Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan's colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.
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The Influence of International Organizations on Militarized Dispute Initiation and Duration
Megan Shannon, Daniel Morey & Frederick Boehmke
International Studies Quarterly, December 2010, Pages 1123-1141
Abstract:
We argue that international organizations decrease the duration of international conflicts by mitigating commitment problems and encouraging combatants to cease hostilities more quickly. Empirical analyses of militarized interstate dispute duration (1950-2000) reveal that increasing shared international organization (IO) participation reduces the length of disputes, even after accounting for selection into international conflict. We also find that international organizations designed to mitigate commitment problems decrease dispute duration, while IOs capable of reducing information asymmetries do not influence dispute length.
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Worldwide spreading of economic crisis
Antonios Garas, Panos Argyrakis, Céline Rozenblat, Marco Tomassini & Shlomo Havlin
New Journal of Physics, November 2010, 113043
Abstract:
We model the spreading of a crisis by constructing a global economic network and applying the susceptible-infected-recovered (SIR) epidemic model with a variable probability of infection. The probability of infection depends on the strength of economic relations between a given pair of countries and the strength of the target country. It is expected that a crisis that originates in a large country, such as the USA, has the potential to spread globally, such as the recent crisis. Surprisingly, we also show that countries with a much lower GDP, such as Belgium, are able to initiate a global crisis. Using the k-shell decomposition method to quantify the spreading power (of a node), we obtain a measure of 'centrality' as a spreader of each country in the economic network. We thus rank the different countries according to the shell they belong to, and find the 12 most central ones. These countries are the most likely to spread a crisis globally. Of these 12, only six are large economies, while the other six are medium/small ones, a result that could not have been otherwise anticipated. Furthermore, we use our model to predict the crisis spreading potential of countries belonging to different shells according to the crisis magnitude.
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Branko Milanovic, Peter Lindert & Jeffrey Williamson
Economic Journal, forthcoming
Abstract:
Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes as unequal as they are today? This article infers inequality across individuals within each of the 28 pre-industrial societies, for which data were available, using what are known as social tables. It applies two new concepts: the inequality possibility frontier and the inequality extraction ratio. They compare the observed income inequality to the maximum feasible inequality that, at a given level of income, might have been ‘extracted' by those in power. The results give new insights into the connection between inequality and economic development in the very long run.
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Regulation under Economic Globalization
Johannes Urpelainen
International Studies Quarterly, December 2010, Pages 1099-1121
Abstract:
How does economic globalization shape the regulations that states enact to control negative externalities? Previous research downplays the role of international cooperation and the present historical context, so it cannot offer a coherent theoretic account of the empirical record. I construct a formal model in which states can engage in regulatory cooperation to coordinate their policies. I prove three main results. First, a "race to the bottom" is unlikely because it requires non-cooperative adjustments by industrialized countries. Second, a partial "race to the top" is likely because many emerging countries stand to gain from reduced negative externalities and the competitiveness problem is limited when the most lucrative export markets are already regulated. Finally, powerful industrialized countries with a high regulatory capacity benefit from a global expansion of regulation.
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Coevolution of Capitalism and Political Representation: The Choice of Electoral Systems
Thomas Cusack, Torben Iversen & David Sockice
American Political Science Review, May 2010, Pages 393-403
Abstract
Protocorporatist West European countries in which economic interests were collectively organized adopted PR in the first quarter of the twentieth century, whereas liberal countries in which economic interests were not collectively organized did not. Political parties, as Marcus Kreuzer points out, choose electoral systems. So how do economic interests translate into party political incentives to adopt electoral reform? We argue that parties in protocorporatist countries were "representative" of and closely linked to economic interests. As electoral competition in single member districts increased sharply up to World War I, great difficulties resulted for the representative parties whose leaders were seen as interest committed. They could not credibly compete for votes outside their interest without leadership changes or reductions in interest influence. Proportional representation offered an obvious solution, allowing parties to target their own voters and their organized interest to continue effective influence in the legislature. In each respect, the opposite was true of liberal countries. Data on party preferences strongly confirm this model.
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When the center can hold: The primacy of politics in shaping Russian democracy
Richard Anderson
Communist and Post-Communist Studies, December 2010, Pages 397-408
Abstract:
Violations of rights, a weak Duma, political parties dominated by bureaucrats, and corrupt privatization are ordinarily taken as signs or even causes of the failure of democracy in Russia or at best as normal traits of electoral politics in a middle-income state. Yet all of these are natural consequences of introducing democracy in a country with the Russian electorate's distinctive recent experience of a loss of a third of the state's territory and half its population. In such a democracy only a centrist, not a liberal, strategy can block a return to authoritarianism, and such a strategy in Russia will subordinate rights to the task of privatization that a Duma weakened by ideological, demographic and geographic impediments to party development cannot conduct. Consequently what are taken as signs or causes of democratic failure in Russia are instead necessary effects of introducing democracy in Russia's special circumstances.
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Democratic differences: Electoral institutions and compliance with GATT/WTO agreements
Stephanie Rickard
European Journal of International Relations, December 2010, Pages 711-729
Abstract:
A growing body of literature argues that democracies are more likely to comply with international agreements than authoritarian states. However, substantial variation exists in the compliance behaviour of democracies. How can this variation be explained? The same mechanism that links regime type to compliance, namely electoral competition, also explains variation in compliance among democracies. This is because the nature of electoral competition varies across democratic systems. An analysis of democratic GATT/WTO member countries from 1980 to 2003 reveals that governments elected via majoritarian electoral rules and/or single-member districts are more likely to violate GATT/WTO agreements than those elected via proportional electoral rules and/or multi-member districts.