Democracy,Development and Comparative Institutional Advantage in Africa

Development in Africa has been stalled for decades in a vicious cycle of poverty, underdevelopment, corruption, and conflict. In this paper, we argue that donors should focus on democracy and accountability as a first priority in development aid. We use the theory of comparative institutional advantage to identify the key institutions that are most likely to facilitate economic development in communities in the modern world. These institutions include an efficient non-corrupt government sector. Subsequently, we discuss how a lack of democracy and accountability inevitably undermines development efforts and investment, referring especially to the Ethiopian experience but also considering the experiences of other African dictatorships. Finally, we discuss how donors, by emphasizing democracy and accountability along with other policies that support democratic institutions, have a greater chance of effectively contributing to African economic development.     

An analysis of growth competitiveness

The publication of the Global Competitiveness Report 2005‐2006 by the World Economic Forum (WEF) (2005 World Economic Forum. 2005. The global competitiveness report, 2005–2006, Hampshire: Palgrave MacMillan.  [Google Scholar]) has focused attention once more upon the relative abilities of many countries to compete in world markets. This article provides an analysis and evaluation of the approach taken by the WEF in constructing its measure of international growth competitiveness, the Growth Competitiveness Index (GCI) which is used to rank countries. In particular, the study identifies three areas where the GCI is vulnerable to criticism. First, the treatment of outliers for hard data items is ambiguous and we identify alternative methods for dealing with outliers that are justifiable or even superior. Second, the crucial role of the variable utility patents in the calculation of the GCI is questioned and serious doubts concerning the use of this variable are raised. Third, the article suggests an alternative approach, based upon structural equation modeling, which should be used for the determination of weights in the index calculation process, rather than the arbitrary method adopted by the WEF.     

Pre-colonial ethnic institutions and party politics in Africa

We examine the role of ethnic institutions on party politics in African democracies. We combine geo-referenced data from 15 countries, 32 parliamentary elections and around 2700 electoral constituencies. First, we document a strong negative association between the degree of pre-colonial ethnic institutional centralization and the local level of competition between political parties in democratic elections today. Second, to address concerns about unobservable differences in geography or history, we show that results hold true when leveraging for identification the redrawing of constituency boundaries over time. Pre-colonial ethnic institutions shape local electoral outcomes and matter for the present and future of African democracies.     

Inflation and growth in South Africa

This paper studies the relationship between inflation and growthin South Africa. Two main issues are addressed: do tests ofthe South African data support the findings of cross-sectionstudies that inflation has a negative effect on growth overthe longer term? and, can higher growth be gained at the costof higher inflation in the short run? The findings are thatinflation drags down growth in South Africa over the longerterm, and that, in the short run, growth above its trend requiresaccelerating inflation. Thus, for growth to be pulled substantiallyabove its present low trend, inflation targeting in South Africawould have to be abandoned. However, this would be counterproductiveover the longer term, once the negative relationship betweeninflation and growth manifests itself.     

Unemployment insurance: The role of electoral systems and regional labour markets

Levels of insurance against unemployment vary considerably across countries. Replacement rates, the ratio relating income from unemployment to what people earned when they were employed, are higher in countries with proportional electoral systems than in countries with majoritarian systems. Also, replacement rates are positively correlated with per capita income and negatively correlated with the countries' unemployment rates. I develop an electoral competition model that replicates these stylized facts.     

Political motivations and electoral competition: Equilibrium analysis and experimental evidence

We study both theoretically and experimentally the set of Nash equilibria of a classical one-dimensional election game with two candidates. These candidates are interested in power and ideology, but their weights on these two motives are not necessarily identical. Apart from obtaining the well known median voter result and the two-sided policy differentiation outcome, the paper uncovers the existence of two new equilibrium configurations, called ‘one-sided’ and ‘probabilistic’ policy differentiation, respectively. Our analysis shows how these equilibrium configurations depend on the relative interests in power (resp., ideology) and the uncertainty about votersʼ preferences. The theoretical predictions are supported by the data collected from a laboratory experiment, as we observe convergence to the Nash equilibrium values at the aggregate as well as at the individual levels in all treatments, and the comparative statics effects across treatments are as predicted by the theory.     

Short Changing the Value of Democracy for Economic Development in Africa

Official donor policy towards Africa seems to be informed by the twin requirements of alleviating poverty on the one hand and ensuring respect for human rights and democratization on the other. In practice, when these interests conflict, as they usually do in Africa, donors tend to choose to continue supporting dictatorships, arguing that economic development will eventually lead to democratization. This paper argues that this faulty reasoning is a product of modernization theory that has had undue influence in western policy circles. Based on a broad survey of the literature, the paper shows that there is no theoretical or empirical basis for the claim that authoritarian regimes would provide better economic performance than democracies in general and particularly in Africa. Furthermore, available evidence suggests that the lack of democratization (defined broadly to include the substance of democracy such as government accountability and basic freedoms in addition to meaningful democratic elections) is a key constraint on economic and social development in Africa. Finally, the paper argues that even when the empirical case to establish a definite causal relationship between democratization and development cannot be ascertained, a very strong case can be made for prioritizing democratization for the long term societal transformation of the continent.     

Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology

This paper investigates the relation between tax mimicking and electoral accountability against the background of data on Spain. The results confirm the presence of tax-mimicking behaviour and indicate a relation between tax mimicking and electoral accountability. Tax rates are found to be higher and the reaction to neighbours' tax rates lower when the electoral margin is high and when left-wing parties control government. Coalition governments do not tax heavily and mimic more than single party majority governments.     

The electoral college: diversification and the election process

The basic financial principle of diversification is applied to the U.S. Presidential election process. Applying this principle shows that the current Electoral College system may offer significant advantages over a direct voting system. Calls for an abolishment of the Electoral College may be premature if the goal of the election process is to ensure accurate results.      

The effects of bureaucracy on political accountability and electoral selection

This paper examines how bureaucracy affects political accountability and electoral selection, using a three-tier political agency model consisting of voters, politicians and bureaucrats. In the model’s hierarchy, politicians are constrained by elections while bureaucrats are controlled by budgets. If voters and bureaucrats prefer different types of politicians (i.e. they have a conflict of interests), incumbents pass oversized budgets to prevent bureaucrats from engaging in strategic behaviours that damage incumbents’ reputations. If, instead, voters and bureaucrats prefer the same type of politicians (i.e. they have an alignment of interests), bureaucrats cannot obtain a concession from politicians. In the latter case, however, bureaucrats send voters a credible signal regarding an incumbent’s type, which improves electoral selection. This paper also shows that political appointment systems improve political accountability in the conflict-of-interests case while they weaken electoral selection in the alignment-of-interests case.     

Democracy and economic growth in Sub-Saharan Africa: a panel data approach

This paper studies the link between democracy and economic development for 28 countries of Sub-Saharan Africa for the period 1980–2005 in a panel data framework. A democracy index constructed from the Freedom House indices. A variety of panel data unit root and cointegration tests are applied. The variables are found to be integrated of order one and cointegrated. The Blundell–Bond system generalized methods-of-moments is employed to conduct a panel error-correction mechanism based causality test within a vector autoregressive structure. Economic growth is found to cause democracy in the short-run, while bidirectionality is uncovered in the long-run. In addition, the long-run coefficients are estimated through the panel fully modified ordinary least squares and dynamic ordinary least squares methods. Democracy has a positive impact on GDP and vice versa. These results lend support to the virtuous cycle hypothesis.     

Financial systems and economic growth in South Africa: a dynamic complementarity test

This study examines the relationship between banks, stock markets and economic growth in South Africa. The study attempts to answer one critical question: are stock markets and banks complementary to one another in the process of enhancing economic growth? The complementarity between the stock markets and banks is examined by including a set of interactive terms in a standard growth model, alongside bank development and stock market development proxies. In order to test the robustness of the results, three proxies of stock market development have been used, namely stock market capitalization, stock market traded value and stock market turnover – against the ratio of bank credit to the private sector, a proxy for bank-based financial development. The economic growth is, however, proxied by real GDP per capita. Using the ARDL-Bounds testing procedure, the study finds that the complementarity between stock market development and bank-based financial development is weak and sensitive to the proxy used to measure stock market development.     

Core competitiveness of the western enterprise in China： risks and countermeasures

Core competitiveness is the source of competitive advantages as well as the guarantee of value growth of the enterprise. This paper discusses the cause of the risks of the core competitiveness of enterprises and the west enterprise, introduces analytical methods of the risks of the core competitiveness and measures guard against the risks of the core competitiveness.     

Legislators' behaviour and electoral rules: Evidence from an Italian reform

We explore how electoral rules and the degree of civicness of the voters interact in shaping elected officials' behaviour. We examine the expenditure proposals sponsored by Italian Senators from 1994 to 2013 and exploit the 2005 electoral reform that transformed a mainly majoritarian system into a mainly proportional one. First, we find that legislators elected in first-past-the-post districts are more likely to sponsor pork-barrel bills and to put effort into legislative activity than those elected with a closed-list proportional system. Second, more importantly, we show that the effects of the electoral rules are muted in areas with high civicness.     

Impact of electoral competition,swing voters and interest groups on equilibrium policy platforms: Exploring the strategic forces at work

This paper constructs a stylized model of election between two opportunistic candidates who can influence equilibrium policy platforms in exchange for monetary contributions provided by two distinct lobby groups. Two key features are embedded which give rise to a dual uncertainty in the model: the existence of partisan spread across voter groups as well as the embezzlement of campaign funds received by the electoral candidates from the interest groups. We derive and compare the equilibrium platforms of the two office-seeking candidates in three scenarios: none of the above uncertainties exist (benchmark case), only uncertainty about voters’ preferences exist (swing-voter case), and both the uncertainties exist (swing voters and lobby groups case). We find that an opportunistic candidate’s swing-voter tax platform is always lower than the benchmark tax platform. Additionally, the equilibrium tax choice of electoral contenders in the swing voters and opposing lobby groups case is found to be greater than the tax level chosen under the swing-voter case if the lobby group advocating a greater level of tax is sufficiently well-organized such that it outweighs the relative swing-voter effect in that group. Furthermore, we find that when an electoral candidate transitions from being highly corrupt to becoming relatively more honest, the equilibrium level of public good provision adjusts in conformity with the well-organized group’s economic preferences. Finally, if the strength of relative lobbying effect is weaker, a lower partisan bias within that group induces an electoral candidate to choose a tax platform closer to that group’s policy bliss point.     

中小型物流企业核心竞争力分析

现代物流企业已成为经济发展的强劲增长点,成为衡量一国现代化程度和综合国力的重要标志之一。从核心竞争力的内涵入手,通过分析与评价物流企业的核心竞争力,可以丰富物流企业理论,帮助物流企业建立较为完善的市场竞争力评价指标体系,从而促进物流企业的健康发展。提高物流企业核心竞争力的主要途径包括:降低企业成本、提升产品质量、完善服务水平。     

Bureaucratic discrimination in electoral authoritarian regimes: Experimental evidence from Russia

Are investors in electoral authoritarian regimes discriminated against for political activism? In this paper, we implement a simple experiment to test whether affiliation with the ruling party or the political opposition affects the probability that investors receive advice from investment promotion agencies in Russian regions. Between December 2016 and June 2017, we sent 1504 emails with a short question and a number of randomized treatments to 188 investment promotion agencies in 70 Russian regions. Although investment promotion agencies are nominally depoliticized in Russia, we find that switching the political affiliation of a potential investor from the opposition party “Yabloko” to the government party “United Russia” on average increases the chances to receive a reply by 30%. The effect strongly depends on regional levels of political competition, with higher levels of discrimination in regions that are less politically competitive.     

Fiscal decentralization and political centralization in China: Implications for growth and inequality

China's current fiscal system is largely decentralized while its governance structure is rather centralized with strong top-down mandates and a homogeneous governance structure. Due to large differences in initial economic structures and revenue bases, the implicit tax rate and fiscal burdens to support the functioning of local government vary significantly across jurisdictions. Regions initially endowed with a broader nonfarm tax base do not need to rely heavily on preexisting or new firms to finance public goods provision, thereby creating a healthy investment environment for the nonfarm sector to grow. In contrast, regions with agriculture as the major economic activity have little resources left for public investment after paying the expenses of bureaucracy. Consequently, differences in economic structures and fiscal burdens may translate into a widening regional gap. Journal of Comparative Economics 34 (4) (2006) 713–726.     

Competition and productivity growth in South Africa

This article shows that mark‐ups are significantly higher in South African manufacturing industries than they are in corresponding industries worldwide. We test for the consequences of this low‐level of product market competition on productivity growth. The results of the paper are that high mark‐ups have a large negative impact on productivity growth in South African manufacturing industry. Our results are robust to three different data sources, two alternative measures of productivity growth, and three distinct measures of the mark‐up. Controlling for potential endogeneity of regressors does not eliminate the findings.