The effects of price on household demand for food and calories in poor countries: are our databases giving reliable estimates?

Food price policy relies heavily on estimated price elasticities of food demand to help balance the nutritional and economic objectives in poor countries. Economists use either unit values (ratios of household expenditure to quantity purchased) or community prices (enumerated from vendors in local markets) as proxies for market prices when estimating price elasticities with household survey data. Biases are believed to result from using unit values, due to measurement error and quality effects, but evidence on this issue is lacking and even less is known about community prices. This article provides an empirical evidence from Vietnam, which suggests that economists should exercise caution when estimating price elasticities from household surveys. A 14-food demand system is estimated alternatively with unit values or community prices, and the elasticity of calories with respect to rice prices is calculated. This elasticity is more than twice as large (?0.54 versus ?0.22) when community prices are used rather than unit values. Hence, conclusions about the nutritional effects of rice price increases appear sensitive to data choices made by economists. More generally, this discrepancy suggests that the household survey databases commonly used by economists may not provide reliable estimates.     

The effects of remittances on support for democracy in Africa: Are remittances a curse or a blessing?

We examine the effect of remittances on the legitimacy of democracy in Africa, testing whether remittance recipients are less likely to support democracy than non-recipients. We hypothesize that the effect of remittances on support for democracy varies across classes (i.e., groups or subtypes) of individuals sharing similar but unobserved background characteristics. Using the Afrobarometer surveys, we try to find out whether the respondents fall into different hidden classes in such a way that the effect of remittances on the degree of support for democracy depends on the class. Our results support that remittances may be a curse for the degree of endorsement and support for democracy, depending on the class of individuals that we consider. The analysis of the probability of being in the remittance curse class indicates that the perception of national priorities plays an important role. People who attest that freedom and rights are the main national priorities have a lower probability of belonging to the remittances curse class than individuals who choose national priorities that are oriented towards the economic conditions of their country.     

“Big Man” politics in the social economy: a case study of microfinance in Kingston,Jamaica

Microfinance and its “reinvention as bankers-for-the-poor” to create financial inclusion has not been effective everywhere. The literature seems to suggest that the social economy and microfinance help marginalized business people; yet no one considers that political bias interferes with the social economy, making it hard for it to be just. The promise of micro-credit was to achieve a double bottom line: first, the financial sustainability of the lending institution itself, and second, the social benefit of providing loans to low-income business people. Yet, alternative pitches of a social economy to “help people” fail to analyze the embedded power dynamics within the social economy. In this case study in downtown Kingston, Jamaica, 233 small-business people who depend on development finance because of social exclusion now find that these targeted programs are intertwined in partisan, sometimes dangerous, politics. As a result, oppressed people opt out of micro-banking programs to resist “Big Man” politics – the politicians or gangsters attempting to control them. In this study of 307 interviews, I analyze the informal politics of Dons and politicians who misuse micro-credit for their own ends. I find that the coupling of class biases and clientelist practices in the social economy discourages eligible business people from taking micro-loans, and argue that the microfinance industry needs to pay close attention to this issue if it is to continue to help marginalized business people.     

Can women's performance in elections determine the engagement of adolescent girls in politics?

Women are responsible for important results in the public sector, but their participation as politicians is still small. One possible way of correcting this situation in the future will be to increase the degree to which adolescent girls participate in politics. The literature about women's empowerment has identified that adolescent girls participate more in politics when role model women are elected. Unlike this literature, however, we run a regression discontinuity design and we show that the defeat of a woman also leads to other women being discouraged from participating. Our main idea is that the performance of female politicians has an influence on the engagement in politics of adolescent girls. Our measure of this engagement is not generated by measuring the perception of the aspirations of adolescent girls, but is taken from net registration to vote between Brazilian municipalities with victorious and defeated female leaders (mayors). Two mechanisms are important for explaining our results: the exchange of experiences between adolescent girls of different ages, and informal (through the Internet and public Wi-Fi) and formal (through the municipal anti-discrimination program) information.     

Tullock on the common law: a loose-cannon iconoclast in action?

Gordon Tullock has been celebrated as an innovative thinker in many areas of public choice. He was also among the first to analyze the law based on the economic approach, yet, his contributions to Law and Economics have been met with skepticism or even outright ignorance. In this paper, I focus on Tullock’s papers dealing with the common law and argue that they contain important insights that have been ignored in the debate regarding legal origins.     

Explaining changes in tax burdens in Latin America: Do politics trump economics?

This paper examines whether elections, which are generally held on fixed dates, and banking crises explain the timing of tax reforms and the allocation of the additional tax burden. Using an original fine-grained data set of tax reforms, the paper finds support for the role of these two sources of variation. In particular, the probability of reform is higher during banking crises. During electoral periods, increasing taxes becomes highly unlikely, even if the government is facing financing problems. Interestingly, politics seem to trump economics: banking crises do not affect the probability of having a reform during electoral times. Moreover, the presence of an IMF program affects the tax instruments chosen: countries with a program increase the value-added tax, while those without raise the personal income tax. Finally, the ideology of the president does not explain who bears the additional tax burden.     

Cellular phones in Mozambique: Who has them and who doesn't?

Cellular phones are considered one of the success stories of contemporary technology diffusion: there are three billion cellular telephones globally, and just over six billion people. This article describes the distributional boundary of the cellular telephone enterprise, as we see it in data from Mozambique. A telephone survey of mobile phone users there revealed that men outnumbered women, especially at higher levels of service and that most were urban, with a particular concentration in the capital city. Thus while pre-paid telephone plans have made basic cellular service affordable to many Mozambicans, the lack of rural infrastructure stills puts access out of the reach of a majority. In addition, pre-paid users pay more per minute for their service—probably not a fair situation for the poor families that tend to take this route to telecommunications.     

The politics of growth: Can lobbying raise growth and welfare?

We consider a setup where lobbyist firms undertake contributions to an office-motivated policy maker in exchange for profit increasing regulations, in a general equilibrium model of R&D-driven growth. We find that, despite increasing concentration—which leads to higher prices and less varieties—lobbying may stimulate growth and increase welfare by means of an expansion in aggregate demand if its real costs are small. This conclusion is supported by a simple calibration exercise.     

R&D and patents: is it a two way street?

ABSTRACT

This paper provides empirical evidence on the link between firms’ R&D expenditure and patent registrations by applying the Granger causality test. We use a panel of Spanish manufacturing firms for the period 1990–2013. We first, examine the R&D-patents relationship in the manufacturing firms as a whole and subsequently, manufacturing was broken down into three groups of firms according to the technological level of the industries to which the firms belonged: high and medium-high (HMHT), low medium (LMT) and low (LT) technology firms. For the entire panel, our results provide support for a bidirectional relationship between R&D and patents, supporting both the traditional view and the reverse causality approach (patents cause R&D). When the sample is split into the three technology levels, we also find strong support for a bidirectional relationship in HMHT firms and weak support in LT ones. We found no evidence of this bidirectional link in LMT firms.     

Toward state funding of elections in india? a comparative perspective on possible options

This paper explores the issue of introduction of state funding of elections in India, focussing on the incentive structures of electoral finance reforms. After summarising the main points in the history of political finance reform in other democracies, and in India, the historical pattern of fund-raising and election expenditures of major parties in India is surveyed. Six electoral finance reform options for India are outlined. It is argued that the time is now ripe for state funding of elections from the point of view of the incentives facing parties and donors.     

The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.     

Experts with a conflict of interest: a source of ambiguity?

We present an experimental design where uncertainty is generated from the advice of experts with conflicts of interest. In this experiment clients are faced with a variant of a multi-armed bandit problem with a random end-time. On the known arm (the “task screen”), clients can earn a certain payment per completion of a decoding task. However, clients may also opt for the unknown arm where they earn an uncertain amount if they end the experiment on this “expert screen”. The amount is uncertain to the clients because the value is being communicated through an “expert” with conflicted incentives. A control session provides for direct transmission of the value to the clients. Our results show that ambiguity aversion is alive-and-well in this environment. Also, when we vary the wage rate on the known arm we find that higher opportunity cost clients are less likely to heed the advice of conflicted experts.     

Fiscal Reliance on Tariff Revenues: In Search of a Political Economy Explanation?

One "stylized fact" about trade policy is that trade taxes as a proportion of total tax revenue are inversely related to a country's economic development, as in countries with poor administrative capabilities trade taxes represent the easiest way for governments to raise revenue (Administrative Capabilities Hypothesis). In this paper we develop an alternative explanation based on political economy considerations: using data from 64 developing countries from 1982 until 1997 we find that the Administrative Capabilities Hypothesis must be complemented with a political economy explanation in order to be able to provide a better account of the relevant empirical evidence.     

Poverty changes in Manaus: Legacy of a Brazilian free trade zone?

This study contributes to the literature on the social impacts of Special Economic Zones by analyzing poverty changes in the Brazilian state of Amazonas, where the Free Trade Zone of Manaus (FTZM) is located. Using census data, statistical micro‐decompositions and counterfactual simulations, we show that labor income was the major driver of poverty declines during the 2000 to 2010 decade in the municipality of Manaus (and all the more so for households with members working in the FTZM, who were less poor to start with). Comparison with ex‐ante “similar” municipalities, in regard to socioeconomic and demographic criteria, corroborates the relative success of Manaus in terms of poverty reduction as well as the essential role played by labor income. Wage regressions also show a significant FTZM premium effect for workers, though diminishing over time. In the rest of the state of Amazonas, nonlabor income remains the main factor for poverty reduction and the FTZM appears to have limited spillover effects, even at short distances. Our contrasting results illustrate both the benefits and limitations that trade and industrial policies face in underprivileged areas and suggest that a better targeting of social policies is needed to improve distributional outcomes and spillovers for the whole state.     

Effect of cultural distance on reverse technology spillover from outward FDI: a bane or a boon?

This article aims to investigate the role of cultural distance in the relationship between outward foreign direct investment (OFDI) and reverse technology spillover. Chinese firm-level data have been used to examine whether the cultural distance between domestic and host countries is a bane or a boon to innovation when firms engage in OFDI for technology acquisition. Generally, businesses with similar cultural backgrounds have an easier time-making technological progress. However, this research revealed a deeper level of reverse technological spillover among firms that invest in Europe and the USA, which are considered to quite culturally distant from China. Reverse technological spillover through OFDI is positively affected by individualism and uncertainty avoidance, which are the two dimensions of cultural distance.     

Θ The cultural transmission of trust norms: Evidence from a lab in the field on a natural experiment

We conduct trust games in three villages in a northeastern Romanian commune. From 1775–1919, these villages were arbitrarily assigned to opposite sides of the Austrian and Ottoman/Russian border despite being located seven kilometers apart. This plausibly exogenous border assignment affected local institutions and late-18th century migration in a manner that likely also affected trust. Conditional on trust norms being affected by these centuries-old historical circumstances, our experimental design tests the degree to which such norms are transmitted intergenerationally. Consistent with theoretical predictions, we find that participants on the Austrian side that also have family roots in the village are indeed more likely to trust outsiders.