Political instability, policy uncertainty, and economic growth: An empirical investigation

This paper elaborates upon the effect of political stability on economic growth using a novel approach. Unlike the literature on growth that emphasizes the turnover of decision makers, this paper focuses on the volatility of economic policies as the relevant indicator of stability. The literature on growth ignores the microeconomic instability associated with frequent changes of government policies. The empirical results of this paper indicate that the effect of political instability on economic growth is not conclusive. Most of the commonly used proxies for political instability have failed to explain growth differences across countries. The political instability indices have no significant effect on growth when a reasonable set of core variables is also included in the regression equation. The results also show that almost all of the policy uncertainty variables are significantly and negatively correlated with economic growth. However, the instability of economic policies has no significant impact on the accumulation of capital.     

Model Uncertainty,Political Learning,and Institutions: A Broader View on Mancur Olson's Theory of Institutional Sclerosis

In his Rise and Decline of Nations, Mancur Olson argues that politically stable countries suffer from declining growth rates caused by the growing influence of distributional coalitions that accumulate over time. The empirical literature supports the notion of a negative relationship between a country's duration of political stability and its growth rates but finds only weak support for a negative influence of distributional coalitions on growth. This paper sketches a simple model of party competition under model uncertainty, which may explain this mixed empirical picture. It shows that politically stable democracies are less well equipped to adjust to shifts in their economic environment than democracies with a shorter history of political stability. In a further step, the paper relates the major theme of this theory and Olson's theory to the more recent literature on institutions and growth. Directions for further research are discussed.     

政治平等与经济增长：经验研究

本文利用政府质量数据库和宾大世界表等数据库的数据,借助了动态索罗增长回归模型,研究了政治平等对经济增长的影响。本文发现,政治平等不仅对经济增长有显著的正向促进作用,对政府支出和通货膨胀的表现也有明显的改善。对政治平等多角度的测量和排除异常值的干扰后的结果表明,本文的结论是稳健的。     

公共债务能够促进经济增长吗?

本文在对公共债务与经济增长关系的理论分析基础上,采用panel data模型,以2001～2010年OECD中19个主要国家为研究对象,进行实证分析。结果发现:第一,对经济增长贡献最大的因素是劳动,其次是资本;第二,公共债务对经济增长没有显著的影响,也不存在滞后效应;第三,在西方国家,采用何种政治制度对经济增长的影响是不显著的,但是,欧元区国家的经济增长比非欧元区国家低。     

The effects of political fragmentation on investments: A case study of watermill construction in medieval Ponthieu, France

The link between political fragmentation and economic development has been frequently discussed in the pre-modern growth literature, yet, it has mostly been treated in a general manner. This paper provides a specific and detailed case study of the patterns of watermill construction in the northern French region of Ponthieu, France. The results suggest that political fragmentation in the juridical context of medieval Europe positively affected investments in machinery. I concentrate on the eleventh and twelfth centuries, a period characterized by political fragmentation and weak central authority, and provide original evidence that watermill construction was significantly more intense in areas where authority was fragmented and landholding was divided between numerous landlords. I suggest that the mechanism behind the phenomenon is that in the institutional context of medieval Europe political fragmentation reduced the territorial extent of lords' jurisdiction and therefore, of their monopoly over watermill construction. This, in return, promoted the construction of neighboring watermills, thereby affecting the number of watermills and the level of competition in the milling industry.     

长三角地区公共服务与经济增长的实证研究

近年来长三角地区经济增长引人注目,然而,公共服务却不能与之匹配。文章从经济增长与公共服务一般理论出发,分析该地区在一体化中两者动态关系,建立公共服务供给、政府竞争与经济增长的实证模型,并进行检验。研究首次发现,该地区公共服务供给增加初期会扩大地区间经济差距,但之后却有利于缩小差距,公共服务与经济差距呈现倒U型关系;且经济增长有利于公共服务供给增加;而地方政府间竞争则与公共服务供给呈负相关关系。     

Income Convergence in African Countries: Evidence from a Stationary Test With Multiple Structural Breaks

This paper examines the catching‐up (stochastic convergence in real per capita income) hypothesis for 52 African countries with respect to the USA. over the 1969‐2011 period, using a highly flexible stationarity test. The empirical results show (i) that all African countries experienced at least one break, switching between catching‐up and divergence paths during the sample period; (ii) that structural breaks tend to coincide with political instability, trade liberalisation policies and terms of trade shocks; (iii) that among the 52 African countries studied, only five lie on the catching‐up path, while the remaining 47 diverge from the USA. Our results show that the economic performance of African countries fall far behind those of the USA and that the economic growth tragedy of Africa continues.     

Political institutions,entrenchments, and the sustainability of economic development – A lesson from rural finance

This paper provides insights on the sustainability of economic development from a historical and political economy perspective. We demonstrate that China's rural financial policy in the 1980s was quite liberal in employing market mechanisms, supporting entrepreneurship, and encouraging competition. These policies were abandoned in the early 1990s and replaced by ubiquitous government interferences that shifted resource and policy priorities to benefit political incumbents. A large panel of survey data confirms that rural household access to finance decreased dramatically in the 1990s and that the statistical significance of economic entrepreneurial factors in determining credit allocation also fell. Further empirical analyses show that market economic conditions are not sufficient to explain these changes and the evidence is consistent with a political entrenchment motive during the political regime after the turmoil in the year 1989. Given the connection between entrenchment and underdevelopment, our findings raise the concern that China's political institutions' insufficient limits on the government could be a challenge for China to sustain its economic success.     

Conflict heterogeneity in Africa

The economic development literature widely concurs that conflicts have adverse economic consequences that contribute to poverty, disinvestment and lower human capital leading to widespread inequality and lower economic growth. As such, understanding the nature of conflict has been an important focus for political leaders, policymakers and researchers alike. However, the existing literature does not typically distinguish between the effects of conflict determinants on conflicts by type of actor or aggressor (i.e. state, group and civilian-based). Using panel data analysis for 46 African countries from 1997 to 2017, and a comprehensive geo-referenced Armed Conflict Location and Event Data (ACLED) conflict dataset, we find evidence of variation in the determinants' effects on conflicts by actor types. For the full sample of countries, we find that military expenditure decreases civilian-based conflicts; globalisation increases both state- and civilian-based conflicts while state fragility increases group-based conflicts. On the other hand, income per capita increases all three types of conflicts. At regional level, we find variation in the effects of military expenditure and globalisation on state- and civilian-based conflicts. However, we find little variation in the effects of the determinants on group-based conflicts across the regions. The findings highlight the nuances in conflicts by actor types and their causes which need to be accounted for when formulating conflict resolution policies.     

大众创业对中国经济发展的影响机制分析

针对当前大众创业热潮背景下存在的创业质量不高、创新性不足等问题,从经济增长数量和经济增长质量两个维度,分析大众创业对经济发展的影响,且需要在不同发展阶段和不同经济区域考察大众创业对经济发展影响的异质性。从就业效应、竞争效应、创新效应和结构效应四个方面分析了大众创业对经济发展的影响机制,认为创业活动不仅通过就业效应和竞争效应影响经济增长数量,促进短期经济增长,更重要的是,创业活动会通过创新效应和结构效应影响经济增长质量,促进长期经济增长。     

Leaders and Tenures in Sub-Saharan Africa

While there has been extensive evidence provided on the varying effects of leaders’ extended tenures on economic growth, political institutions and conflict, little attention in the empirical literature has been given to the determinants that may contribute to long tenures. Without being cognisant of these underlying factors, any efforts aimed at limiting tenures to progress economic development and democratic institutions will have little effect, as evidenced by several leaders’ attempts to subvert constitutional laws in this regard. Using panel data analysis for sub-Saharan African countries between 1960 and 2015, this study looks at the likely determinants (both at individual and country level) that can increase or decrease political survival. The preliminary results suggest that at an individual level, the leader’s age, political career and rebel experience increase the likelihood of extended tenure, while the leader’s education reduces the probability of extended tenure. At a country level, the country’s wealth is likely to increase tenures, while increased conflict and strong institutions decrease a leader’s tenure.     

Political competition and debt trajectories in Japan and the OECD

Public debt has accumulated rapidly in OECD countries since 1970. We assess the political explanations for debt accumulation, paying particular attention to the US and Japan. The key finding is that political competition explains variation in debt accumulation. Political competition encourages fiscal prudence. Hence, non-competitive countries will build up debt. Thirty years of OECD experience provides strong empirical support for this conjecture, and suggests that high debt levels in Japan are more due to political than economic factors.     

Policies employed by the FRG in order to exemplify political conditions for trade with socialist countries∗

Abstract

Unlike most previous works which commonly define globalization as a strict economic characteristic, using the overall globalization index and its three sub-dimensions – economic, social and political integrations to proxy openness, this paper examines the effect of globalization on economic growth associated with autocratic institutional in China, using the a two-step dynamic panel generalized method of moments technique in a panel of 30 provinces, municipalities and the autonomous regions over the period of 1970–2006. We find that different globalization indices have different impacts on regional economic growth. Also, autocracy may harm regional development, but these conclusions are very sensitive to different globalization variables specifications. Further, considering the interactive effects between globalization and economic growth, we show that in the period of higher global integration, the higher democracy (lower autocracy) may harm economic growth in the case of China. We emphasize that democracy is clearly not a necessary condition for the purpose of economic growth in China.     

Understanding China's move into Africa: an empirical analysis

An important new issue on the international scene is the upsurge in market and non-market South–South relations. The aim of this paper is to understand the dynamics that lie behind the recent Chinese move into Africa by empirically exploring the determinants of Sino-African relationships. In order to have a comprehensive picture, the analysis takes into consideration the main channels of commercial and political interactions: outward foreign direct investment (OFDI), trade and aid (international economic cooperation). The empirical analysis utilises a panel data set, from 1998 to 2005, for 43 African countries. The econometric estimates for three simultaneous equations are based on an instrumental variables method. Results show that the Chinese move into Africa is driven by strategic interaction among the three channels (FDI, trade and economic cooperation) as well as by pull factors, i.e. the characteristics of the receiving countries in terms of natural resource endowments and their market potential.     

Liberalisation and Financial Sector Competition: A Critical Contribution to the Empirics with an African Assessment

This paper investigates how financial, trade, institutional and political liberalisation policies have affected financial sector competition in Africa using updated data to appraise second‐generation reforms. The “freedom to trade” and “economic freedom” indices are employed. Hitherto, unexplored financial sector concepts of formalisation, semi‐formalisation, informalisation and non‐formalisation are also introduced. The following findings are established. First, relative to money supply, (i) with the exception of the economic freedom mechanism, liberalisation policies have generally decreased the growth of the formal financial sector to the benefit of other financial sectors; (ii) apart from the foreign direct investment and economic freedom channels, liberalisation policies have been fruitful for semi‐formal financial development at the cost of other financial sectors and; (iii) with the exception of economic freedom, both the informal and non‐formal sectors have developed owing to liberalisation to the detriment of the formal financial sector. Second, relative to gross domestic product, the semi‐formal, informal and/or non‐formal financial sectors have also generally improved as a result of liberalisation. Policy implications are discussed.     

Public spending and economic growth: evidence from Ghana (1970–2004)

Governments undertake expenditures to pursue a variety of objectives, one of which is economic growth. This paper examines aggregated and disaggregated expenditure on economic growth in Ghana over the period 1970–2004. Expenditure on education and health represents human capital development, while expenditure on roads and waterways captures infrastructure development. The study reveals that the aggregated government expenditure retarded economic growth. The study's findings show that expenditures on health and infrastructure promote economic growth, while those on education had no significant impact in the short run. In addition, the political economy variables?namely the nature of governance (democracy) and political instability (years of changes in government and military dictatorship)?proved significant in explaining Ghana's economic growth over the study period.     

The Political Economy of Middle‐Income Traps: Is South Africa in a Long‐Run Growth Trap? The Path to “Bounded Populism”

The current literature on middle‐income traps has been dominated by economists who have relied on economic explanations mainly around stages of development and the structural transformation of economies. But there is an equally vigorous literature from political science which speaks to the political economy of transitions. We look at the dynamics of how economic modernisation triggers structural changes with winners and losers and how this is reflected in the polarisation of the political sphere amongst middle‐income countries. This paper asks the question of whether South Africa is an archetypical example of a country stuck in a trap and how this has affected the policy choices that it has made. South Africa needs to move up the value chain with a viable value proposition, and this requires a very different policy set and human capital plan.     

长三角外商直接投资对工业经济增长影响的实证分析

文章利用长三角地区2004年经济普查中类行业的截面数据,采用普通最小二乘法（OLS）和分位数回归法（Quantile Regress）研究了该地区外商直接投资对于工业经济增长的影响,在控制人力资本和市场竞争度之后,实证结果表明外商直接投资对于长三角地区的工业经济增长显著正相关,即FDI总的溢出效应为正,同时更富有竞争力的市场也有利于工业总产值的提高。通过长三角地区内部的比较分析得出,上海利用FDI的溢出效应为负,江苏利用FDI的溢出效应为正且不显著,浙江的FDI则具有显著正的溢出效应。     

Political instability, investment and economic growth in Sub-Saharan Africa

This paper explores the relationship between political instabilityand economic growth in Sub-Saharan African nations. A more comprehensivemeasure of political instability than has previously been developedis used in combination with a simultaneous equations model anddynamic panel estimation approach to produce several interestinginferences. First, the statistically significant inverse relationshipbetween political instability and economic growth identifiedby earlier studies is confirmed by the estimates presented here.Second, the estimated system of equations indicates that economicgrowth and political instability are jointly endogenous. Third,in addition to the direct impact that political instabilityhas upon growth, estimates confirm the hypothesis that politicalinstability indirectly decreases economic growth by decreasinglong-run capital accumulation. Fourth, failure to account forthe dynamic nature of growth equations as well as the endogeneityof explanatory variables may produce biased effects of politicalinstability on growth. Fifth, the broad measure of politicalinstability we use in this study can better capture the effectsof political instability on economic growth than 'elite' instabilitythat has been used by earlier researchers. Finally, principalcomponents estimation is used to develop a measure of politicalinstability that can serve as an alternative to the arbitraryweighting scheme used in previous research.     

Strategic implications of the Soviet‐North Korean alliance

Abstract

Globalization is commonly defined as a strict economic path by most previous works, but it is really a fuzzy concept with unrestrained dimensions. While the ideological location of an incumbent political party is a powerful predictor of its policy position, the role of a political party in the globalization-growth nexus has never been fully empirically investigated. By applying Pedroni's panel cointegration technique instead of a time-series or traditional panel data approach, this paper aims to empirically re-examine the co-movement and the causal relationship among economic growth, the overall globalization index, and its three main dimensions—economic, social, as well as political integrations—by using panel data for 23 Organization for Economic Cooperation and Development (OECD) countries for 1970 to 2006. Certainly, the political party variable is taken into account as the advanced test is promoted, and we finally discover that all variables move together in the long run. Based on the results of the panel causality test, though the evidence of short-run causality is very weak, it does show long-run unidirectional causality running from the overall index of globalization, economic globalization, and social globalization to growth. Finally, the critical role of the political party is deeply discussed in relation with our results.