Dynasty
The political consequences of Islam's economic legacy
Timur Kuran
Philosophy & Social Criticism, May 2013, Pages 395-405
Abstract:
Several of the Middle East's traditional economic institutions hampered its political development by limiting checks on executive power, preventing the formation of organized and durable opposition movements, and keeping civil society weak. They include Islam's original tax system, which failed to protect property rights; the waqf, whose rigidity hampered the development of civil society; and private commercial enterprises, whose small scales and short lives blocked the development of private coalitions able to bargain with the state. These institutions contributed to features that sustain autocracies and keep democracies unstable: high corruption, low trust, widespread nepotism and high tolerance for law-breaking.
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Isolated Capital Cities and Misgovernance: Theory and Evidence
Filipe Campante, Quoc-Anh Do & Bernardo Guimaraes
NBER Working Paper, May 2013
Abstract:
Motivated by a novel stylized fact - countries with isolated capital cities display worse quality of governance - we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory.
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Cities, Redistribution, and Authoritarian Regime Survival
Jeremy Wallace
Journal of Politics, July 2013, Pages 632-645
Abstract:
How does redistributive policy affect the survival of authoritarian regimes? I argue that redistributive policy in favor of cities, while temporarily reducing urban grievances, in the long-run undermines regime survival by inducing urban concentration. I test the argument using cross-national city population, urban bias, and nondemocratic regime survival data in the post-WWII period. The results show that urban concentration is dangerous for dictators principally by promoting collective action, that urban bias induces urban concentration, and that urban bias represents a Faustian bargain with short-term benefits overwhelmed by long-term costs.
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The Big Oil Change: A Closer Look at the Haber-Menaldo Analysis
Jørgen Andersen & Michael Ross
Comparative Political Studies, forthcoming
Abstract:
The claim that oil wealth tends to block democratic transitions has recently been challenged by Haber and Menaldo, who use historical data going back to 1800 and conclude there is no "resource curse." We revisit their data and models, and show they might be correct for the period before the 1970s, but since about 1980, there has been a pronounced resource curse. We argue that oil wealth only became a hindrance to democratic transitions after the transformative events of the 1970s, which enabled developing country governments to capture the oil rents that were previously siphoned off by foreign-owned firms. We also explain why the Haber-Menaldo study failed to identify this: partly because the authors draw invalid inferences from their data and partly because they assume that the relationship between oil wealth and democracy has not changed for the past 200 years.
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The Persistence of Inferior Cultural-Institutional Conventions
Marianna Belloc & Samuel Bowles
American Economic Review, May 2013, Pages 93-98
Abstract:
Our theory of cultural-institutional persistence and innovation is based on uncoordinated updating of individual social norms and contracts, so that both culture and institutions co-evolve. We explain why Pareto-dominated cultural-institutional configurations may persist over long periods and how transitions nonetheless occur. In our model the exercise of elite power plays no role in either persistence or innovation, and transitions occur endogenously. This is unlike models in which elites impose inferior institutions or cultures as a self-interested distributional strategy. We show that persistence will be greater the more inferior is the Pareto-dominated configuration and the more rational and individualistic is the population.
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Autocracies and Terrorism: Conditioning Effects of Authoritarian Regime Type on Terrorist Attacks
Matthew Wilson & James Piazza
American Journal of Political Science, forthcoming
Abstract:
Although empirical research has generally demonstrated that democracies experience more terrorism than autocracies, research suggests that this depends upon complex institutional differences that go beyond the democracy-autocracy divide. This study examines these differences, linking institutions to strategies of coercion and co-optation. Using zero-inflated negative binomial regression estimations on Geddes' (2003) autocratic regime-type data for 161 countries between 1970 and 2006, we find that single-party authoritarian regimes consistently experience less domestic and international terrorism relative to military autocracies and democracies. This finding is robust to a large number of specifications, underscoring the explanatory power of regime type for predicting terrorism. Our explanation for these findings is that party-based autocracies have a wider range of coercion and co-option strategies that they can employ to address grievance and dissent than do other, more strategically restricted, regimes.
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Regularizing Rioting: Permitting Public Protest in an Authoritarian Regime
Peter Lorentzen
Quarterly Journal of Political Science, Spring 2013, Pages 127-158
Abstract:
Lacking the informative feedback provided by competitive elections, an unfettered press and an active civil society, authoritarian regimes can find it difficult to identify which social groups have become dangerously discontented and to monitor lower levels of government. While a rise in public protest is often seen as a harbinger of regime collapse in such states, this paper uses a formal model and a close examination of the Chinese case to show that the informal toleration and even encouragement of small-scale, narrowly economic protests can be an effective information gathering tool, mitigating these informational problems. The analysis demonstrates that protests should be observed most frequently where discontent is neither too high nor too low. This calls into question the common assumption in comparative politics that an increase in protests necessarily reflects an increase in discontent or the weakness of a regime.
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Why Do Some Regions in Europe Have a Higher Quality of Government?
Nicholas Charron & Victor Lapuente
Journal of Politics, July 2013, Pages 567-582
Abstract:
While most of the quantitative literature on quality of government has focused on national differences, subnational variation has been neglected, mainly due to the lack of data. This study explores subnational divergences in quality of government (understood as control of corruption, impartial treatment of citizens, and government effectiveness) using newly created subnational data including over 70 European regions. It addresses the institutional puzzle of why regions which share so many formal institutions (e.g., Northern and Southern Italy) do diverge so much in quality of government. Similar to recent political economy scholarship, our theory points to historical path dependencies. The study argues that a major factor explaining regional path dependencies is the consolidation of clientelistic networks in those regions where rulers have historically (seventeenth to nineteenth centuries) less constraints to their decisions.
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The value of local political connections in a low-corruption environment
Mario Daniele Amore & Morten Bennedsen
Journal of Financial Economics, forthcoming
Abstract:
We use exogenous changes in Danish local municipality sizes to identify a large positive effect of political power on the profitability of firms related by family to local politicians. Our difference-in-differences estimate is consistent with a unitary elasticity of connected firms' performance to political power (as measured by population per elected politician). Increasing power boosts firms' operating returns, especially in industries relying heavily on public demand. Focusing on arguably the world's least corrupt country, we highlight the importance of corporate rent seeking at local governmental levels, which account for nearly half of total public expenditures.
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Cash Holdings of Politically Connected Firms
Narjess Boubakri, Sadok El Ghoul & Walid Saffar
Journal of Multinational Financial Management, forthcoming
Abstract:
Politically connected firms benefit from soft-budget constraints and are unlikely to suffer from liquidity constraints. This argument suggests that politically connected firms should hold less cash than non-connected peers. Another view posits that these firms exhibit acute corporate governance problems. In this setting, politically connected firms are more likely to hold more cash than non-connected firms. Using a sample of 50,119 firm-year observations from 31 countries, we find that politically connected firms hold more cash than their non-connected peers. We put forth two explanations for this result. Firstly, politicians use politically connected firms as "cash cows" to advance their political agendas. Secondly, political connections are conducive to agency problems. In additional analyses, we find that the positive relationship between political connections and cash holdings is stronger when corporate governance is weak.
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Svetlana Ledyaeva, Päivi Karhunen & Riitta Kosonen
European Journal of Political Economy, December 2013, Pages 1-25
Abstract:
We examine the effects of subnational variations in corruption and democratization on the location decisions of foreign investors in Russian regions using firm-level panel data for the period 1996-2007. We link these effects to the level of corruption and type of political regime in the country of origin of a foreign investor. We find a relationship between attributes of foreign investors' home countries and attributes of the regions in which investment takes place: foreign investors from less corrupt and democratic countries tend to invest in less corrupt and more democratic Russian regions, whereas those from more corrupt and non-democratic countries tend to invest in more corrupt and less democratic regions. An inference is that, in Russian regions with high corruption and with autocratic government, foreign direct investment appears driven by the personal interests of controlling regional political elites who collaborate for mutual gain with foreign investors from corrupt and autocratic countries. Our results suggest a general conclusion that origin and location of foreign investment are linked by common political culture.
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Nicholas Charron
Social Networks, forthcoming
Abstract:
What is the extent to which a country's political institutions impact aggregate voting behavior in a comparative perspective? More specifically, are citizens in some countries more inclined vote on the basis of ‘quality' or ‘merit' over ‘friendship' or ‘loyalty', and if so, why? This paper seeks to address how the extent to which a country's political institutions are impartial (treats all citizens equally, free from corruption, strong rule of law) impact aggregate citizen behavior. When political institutions are more (less) impartial, success in society is more often on the basis of merit (patrimonial ties). This test cases is voting in the Eurovision Song Contest (ESC) from 1975 to 2012 among pairs and blocs of ‘voting friends'. The theory elucidates that given that certain pairs or blocs exhibit systematic voting bias for one another over time, the bias will be considerably less among impartial states than those with highly partial institutions. Using several measures of ‘friendship', I find strong empirical evidence for this claim, even when controlling for myriad alternative factors and taking into account various voting regimes. The analysis gives us new insights on how political institutions condition aggregate citizen behavior in general and that although there is much bias in ESC voting, not all bias is equal among friend-countries.
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Does Decentralization Improve Perceptions of Accountability? Attitudinal Evidence from Colombia
Maria Escobar-Lemmon & Ashley Ross
American Journal of Political Science, forthcoming
Abstract:
Decentralization is argued to create incentives for local and regional politicians to be more responsive and accountable to their constituents, but few studies have directly tested this claim. We use survey data from Colombia to examine individual-level evaluations of the degree to which decentralization prompts citizens to view department government as more accountable. We estimate the effect of administrative, fiscal, and political decentralization, controlling for participation, political knowledge, confidence in government, education, and income on perceptions of accountability. Our results indicate that administrative and fiscal decentralization improve perceptions of accountability, while political decentralization does not.
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Individual and Contextual Correlates of Trust in Media Across 44 Countries
Yariv Tsfati & Gal Ariely
Communication Research, forthcoming
Abstract:
Media research demonstrates that audience trust in the news media is a highly consequential factor, shaping audience selection of and response to media, and potentially impacting citizens' perceptions of the political system at large. Still, our knowledge about the correlates of trust in media is limited. Only a few studies have utilized a correlational design to explore the associations between trust in media and other factors, and almost all of these studies originate in the U.S. context. The current investigation utilizes data from 44 diverse countries (n = 57,847), collected as part of the World Values Survey, to broaden our understanding of trust in media. The aim is two-fold - to learn about individual-level correlates across contexts and to demonstrate that macro-level factors play a part in shaping such trust. Our findings indicate that levels of political interest, interpersonal trust, and exposure to television news and newspapers are positively correlated with trust in media, while education and exposure to news on the Internet are negatively associated. On the macro level, postmaterialism emerged as a consistent predictor of trust in media. State ownership of the media industry did not have a main effect on trust in media after controlling for other factors. However, an interaction was found between state ownership and level of democracy: state ownership of television is positively associated with media trust in democratic societies and negatively associated with trust in media in nondemocratic societies.
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Oil, Gas and Conflict: A Mathematical Model for the Resource Curse
Yiyong Cai & David Newth
PLoS ONE, June 2013
Abstract:
Oil and natural gas are highly valuable natural resources, but many countries with large untapped reserves suffer from poor economic and social-welfare performance. This conundrum is known as the resource curse. The resource curse is a result of poor governance and wealth distribution structures that allow the elite to monopolize resources for self-gain. When rival social groups compete for natural resources, civil unrest soon follows. While conceptually easy to follow, there have been few formal attempts to study this phenomenon. Thus, we develop a mathematical model that captures the basic elements and dynamics of this dilemma. We show that when resources are monopolized by the elite, increased exportation leads to decreased domestic production. This is due to under-provision of the resource-embedded energy and industrial infrastructure. Decreased domestic production then lowers the marginal return on productive activities, and insurgency emerges. The resultant conflict further displaces human, built, and natural capital. It forces the economy into a vicious downward spiral. Our numerical results highlight the importance of governance reform and productivity growth in reducing oil-and-gas-related conflicts, and thus identify potential points of intervention to break the downward spiral.