INDEPENDENT AGENCIES,POLITICAL INTERFERENCE,AND FIRM INVESTMENT: EVIDENCE FROM THE EUROPEAN UNION

Investment in network infrastructure is crucial for economic growth. This article studies the impact of the presence of independent regulatory agencies (IRAs) on the investment of European regulated firms. We account for measurement error in formal independence of IRAs by exploiting cross‐country heterogeneity in the quality of political institutions. Results show that regulatory independence increases firms' investment rate by around 1.2%–3.3%. The positive effect survives when we control for social capital accumulation, investor protection, and market liberalization. However, the effect of IRAs is not immune to politics, as we find that political interference in regulatory functions persists in the European Union and is detrimental to firm investment. (JEL D78, L50, D92, H1)     

FISCAL FEDERALISM,DECENTRALIZATION, AND ECONOMIC GROWTH: A META‐ANALYSIS

The theoretical literature on fiscal federalism has identified several channels through which government decentralization could affect economic growth. Much of the literature focuses on the efficiency aspects of a decentralized provision of public services, but decentralization may also increase growth by raising the ability of the political system to innovate and carry out reforms. In contrast, some authors argue that decentralization increases corruption and government inefficiency, and thus may diminish growth. Given this theoretical ambiguity, several studies have attempted to identify the effect of decentralization on economic growth empirically over the last two decades. We review and conduct a meta‐analysis of this empirical literature. Based on our analysis, we point out open questions and discuss possible ways to answer them. (JEL H77, O43, C52)     

Economic Freedom and Economic Growth in South East Europe

Economic freedom, understood as absence of barriers for business entry, business operations and business exit, is a source of economic development. Its impact is indirect: through institutions framework creation and environment that encourages economic development. Primarily, economic freedoms are a reflection of institutional arrangement, which makes business operations and the realization of business ideas easier for entrepreneurs and managers, who are two extremely important groups for economic development. The aim of the paper is to present empirical analysis of interrelation between economic freedom and economic development, expressed through several indicators, such as gross domestic product, income per capita, foreign direct investment per capita.     

PRODUCTIVITY GROWTH AND TECHNOLOGICAL DIFFUSION THROUGH FOREIGN DIRECT INVESTMENT

Foreign direct investment (FDI) has dramatically increased worldwide and is the most important form of all private capital flows to developing countries. Yet, it is an important empirical question whether FDI affects total factor productivity (TFP) positively. We investigate the effect of FDI on TFP growth in a large sample of countries in 1970–2000. Our econometric results indicate that FDI has a positive and direct effect on TFP growth. However, we do not find any evidence that the impact of FDI on TFP growth is only conditional on the recipient country's capability to absorb foreign technology. We carefully address the robustness of the empirical results . ( JEL O11, O40, O47, F21)     

Central bank independence, economic freedom, and inflation rates

Measures of central bank independence combine many attributes that may or may not affect inflation. Central bank attributes are chosen as a result of political calculations over the distribution of resources between competing interest groups. Simultaneity bias results from regressions of central bank independence or of economic and political freedom on inflation or growth. Our estimates demonstrate the connections between economic and political freedom and central bank attributes that lead to inflation. Countries showing high degrees of economic freedom adopt structures that lead to lower inflation; those that show high degrees of political freedom do not adopt inflation-reducing institutional structures.     

FRACTIONALIZATION,POLARIZATION, AND ECONOMIC GROWTH: IDENTIFYING THE TRANSMISSION CHANNELS

In this article, we examine empirically both the direct and indirect links between ethnic fragmentation and economic growth. We find that both ethnic fractionalization and polarization are negatively associated with growth if considered in isolation; an effect that is though primarily attributed to their link to other growth‐related activities (i.e., investment, conflict, control of corruption, fertility). We study the corresponding transmission channels and calculate their relative importance in explaining a development curse based on ethnic diversity. For both measures of ethnic fragmentation, we find the corruption channel to be the most important one. (JEL C21, O11, Z13)     

Effects of Macroeconomic Uncertainty on Investment and Economic Growth: Evidence from Pakistan

The relationship between macroeconomic uncertainty, investment and economic growth is an empirical issue in developing countries. This paper investigates the effects of macroeconomic uncertainty on investment and economic growth in Pakistan for the period 1975–2008 by using the accelerator model of investment and endogenous growth model. The conditional variances, directly estimated through the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model is utilized for erecting the uncertainty variables related to fiscal policy, openness and foreign capital inflows. The results clearly indicate that the macroeconomic uncertainty have significant negative effects on investment and per capita income of Pakistan. We conclude that a reduction in macroeconomic uncertainty through appropriate fiscal and monetary policy, stability in capital inflows and improved trade performance could result in high investment and sustainable economic growth in the country.     

COMPUTERS, PRODUCTIVITY, AND INPUT SUBSTITUTION

This paper examines the relationship between computers and economic growth using U.S. sectoral data from 1947 to 1991. The computer-producing sector shows strong multi-factor productivity growth that reflects the fundamental technological progress behind the computer revolution. Although aggregate multi-factor productivity remains low, the computer-producing sector made a substantial contribution to its modest revival in the 1980s. In sharp contrast, computer-using sectors show little multi-factor productivity growth since 1973. For these sectors, the computer revolution is largely a story of traditional input substitution, investment and rapid capital accumulation with little evidence that computer investment affects multifactor productivity. (JEL O30, O47)     

Remittances,Institutions and Growth in Africa

Remittances have become an important source of external finance in many developing countries. This article examines the relationship between remittances, institutions and economic growth in a panel of 26 African countries over the period 1980–2014. We apply the fixed effects (FE) and the two‐step system generalized method‐of‐moments (GMM) estimation methods. Our results show that there is a positive relationship between remittances and growth. We also find that institutions are an important determinant of economic growth. The interaction terms have a positive and statistically significant effect on economic growth. Thus, the growth effect of remittances is enhanced in the presence of strong institutions. Strong institutions are therefore germane in attracting greater remittance inflows to African countries. A clearer understanding of the channels through which remittance flows will enhance growth in African economies may assist policymakers to craft appropriate policies. In particular, a policy environment that promotes strong institutions would serve to attract more remittances.     

POLITICAL IDEOLOGY AND ECONOMIC GROWTH: EVIDENCE FROM THE FRENCH DEMOCRACY

We provide a test of the impact of voters' political ideology on economic growth and of the role of preferences for government size as a transmission channel. We focus on France from the beginning of its stable democratic experience in 1871. A move of voters' ideology to the right increases economic growth over the total observation period. However, the growth effect of ideology is mediated by voters' preferences for government size only during the post‐World War II period. For reverse causality concerns, we use the political ideology of other historical democracies as an instrument variable for France's ideology. (JEL E6, O43, H11)     

THE CULTURE OF CORRUPTION,TAX EVASION,AND ECONOMIC GROWTH

This study uses a dynamic general equilibrium model to quantify the effects of corruption and tax evasion on fiscal policy and economic growth. The model is calibrated to match estimates of tax evasion in developing countries. The calibrated model is able to generate reasonable predictions for net tax rates, the corruption associated with public investment projects, and the negative correlation between corruption and tax revenue. The presence of corruption and evasion is shown to have significant, but not large, negative effects on economic growth. The relatively moderate effects help explain the absence of a robust negative correlation between growth and corruption in cross‐country data. The model also implies that cracking down on tax evasion before addressing corruption can be a bad idea and that higher wages for public officials can improve welfare. (JEL H3, O4)     

Invisible labor,invisible bodies: how the global political economy affects reproductive freedom in the Philippines

ABSTRACT

Feminist scholars have critically demonstrated the links between the global political economy, social reproduction and gender-based violence. This article builds on this scholarship by investigating restrictions to reproductive freedom and their connection to the depletion of women’s bodies in the global political economy. Specifically, I use the Depletion through Social Reproduction (DSR) framework to reveal how the work of social reproduction is harnessed to service economic activity at the cost of rights to bodily integrity with the aid of religious fundamentalist ideologies that (re)inscribe discourses of female altruism such as the “self-sacrificing mother” ideal. Drawing on the case of the Philippines, I argue that the control of women’s bodies is integral to the Philippines’ economic strategy of exporting care workers in a competitive global political economy. This strategy is abetted by local Catholic religious fundamentalists who challenge reproductive rights reform at various levels of policy-making and legitimize the lack of investment to sustain social reproduction in the household, community and country as a whole. This article suggests that the neoliberal global economy is increasingly reproduced through women’s labor at the cost of their bodily integrity and reproductive freedoms.     

THE POLITICAL ECONOMY OF INTERGENERATIONAL INCOME MOBILITY

The intergenerational elasticity of income is considered one of the best measures of the degree to which a society gives equal opportunity to its members. While much research has been devoted to measuring this reduced‐form parameter, less is known about its underlying structural determinants. Using a model with exogenous talent endowments, endogenous parental investment in children, and endogenous redistributive institutions, we identify the structural parameters that govern the intergenerational elasticity of income. The model clarifies how the interaction between private and collective decisions determines the equilibrium level of social mobility. Two societies with similar economic and biological fundamentals may have vastly different degrees of intergenerational mobility depending on their political institutions. We offer empirical evidence in line with the predictions of the model. We conclude that international comparisons of intergenerational elasticity of income are not particularly informative about fairness without taking into account differences in politico‐economic institutions. (JEL E24, J62, J68, P16)     

The disorganized family: institutions,practices and normativity

This paper considers the value of a normative account of the relationship between agents and institutions for contemporary efforts to explain ever more complex and disorganized forms of social life. The character of social institutions, as they relate to practices, agents and norms, is explored through an engagement with the common claim that family life has been de‐institutionalized. The paper argues that a normative rather than empirical definition of institutions avoids a false distinction between institutions and practices. Drawing on ideas of social freedom and creative action from critical theory, the changes in family life are explained not as an effect of de‐institutionalization, but as a shift from an organized to a disorganized institutional type. This is understood as a response to changes in the wider normative structure, as a norm of individual freedom has undermined the legitimacy of the organized patriarchal nuclear family, with gender ascribed roles and associated duties. Contemporary motherhood is drawn on to illustrate the value of analysing the dynamic interactions between institutions, roles and practices for capturing both the complexity and the patterned quality of social experience.     

The Impact of Economic Freedom and Personal Freedom on Net In-Migration in the U.S.: A State-Level Empirical Analysis, 2000 to 2010

Arguably, private enterprise flourishes under conditions of increased freedom. However, increases in economic freedom can sometimes impose costs on others (negative externalities and monopoly power being prominent examples). Nevertheless, on balance, it is typically expected that the greater the degree of economic freedom, the more successfully and efficiently markets perform and the greater the prosperity created through private enterprise. These net outcomes from greater freedom accelerate economic growth and development, which in turn creates opportunities for yet further success. From a different perspective, it can be argued that greater personal freedom promotes higher levels of utility for consumers in non-economic ways. Accordingly, the present study empirically investigates whether the prospects of greater economic freedom and/or greater personal freedom in any given state vis-à-vis other states act(s) to induce a greater net influx of migrants. This empirical study of internal U.S. migration over the study period from 2000 to 2010 finds clear evidence that migrants prefer to move to those states with greater economic freedom on the one hand and greater personal freedom on the other hand.     

HOW DOES INFRASTRUCTURE AFFECT ECONOMIC GROWTH? INSIGHTS FROM A SEMIPARAMETRIC SMOOTH COEFFICIENT APPROACH AND THE CASE OF TELECOMMUNICATIONS IN CHINA

This paper attempts to shed new empirical light on infrastructure's role in economic growth using a semiparametric smooth coefficient model to avoid specification problems in some existing studies and admit infrastructure‐induced nonlinearity and parameter heterogeneity. Estimated by a three‐step procedure that controls for endogeneity in both the regressors and the environmental variable (infrastructure), the model is applied to the empirical context of telecommunications infrastructure in a fast‐growing economy, China. The results reveal that telecommunications contribute to output through various sources, namely its neutral and non‐neutral impacts. The total/net effect is positive but largely decreases with telecommunications stocks. (JEL L96, O4, O1)     

MILITARY SPENDING AND THE GROWTH‐MAXIMIZING ALLOCATION OF PUBLIC CAPITAL: A CROSS‐COUNTRY EMPIRICAL ANALYSIS

In this paper we present an endogenous growth model to analyze the growth maximizing allocation of public investment among N different types of public capital. Using this general model of public capital formation, we analyze the stability of the long‐run equilibrium and we derive the growth‐maximizing values of the shares of public investment allocated to the different types of public capital, as well as the growth‐maximizing tax rate (amount of total public investment as a share of GDP). Then we proceed with an empirical investigation of the theoretical implication of the model that both the effects of the shares of public investment and the tax rate on the long‐run growth rate are non‐linear, following an inverse U‐shaped pattern. Using data of public investment in infrastructure and military capital formation, we derive empirical estimations that confirm the theoretical implications of the model. (JEL E62, H56, O40).     

BELIEVING IN ECONOMIC THEORIES: SEX, LIES, EVIDENCE, TRUST, AND IDEOLOGY

Political economics views heterogeneity of political preferences largely as a reflection of heterogeneity in valuations of known policy outcomes. Voters, however, may be uncertain about policy outcomes, in part, because of uncertainty about how the economic world actually works. Heterogeneity of people's beliefs about how well economic theories predict outcomes could then affect policy through democratic institutions. Using a combination of experimental and survey techniques drawn from economics and social and political psychology, we examine several potential sources of heterogeneity in beliefs about the predictive content of supply and demand theory, with a particular focus on the role of ideology. ( JEL A110, A130, C420, C900)     

PERSISTENCE OF POLITICIANS AND FIRMS' INNOVATION

We empirically investigate whether the persistence of politicians in political institutions affects the innovation activity of firms. We use 12,000 firm‐level observations from three waves of the Italian Observatory over Small and Medium Enterprises, and introduce a measure of political persistence defined as the average length of individual political careers in political institutions of Italian municipalities. Using death of politicians as an exogenous source of variation of political persistence, we find a robust negative relation between political persistence and the probability of process innovation. This finding is consistent with the view that political stability may hinder firms' incentive to innovate to maintain their competitiveness, as long as they can extract rents from long‐term connections with politicians. (JEL D22, D72, O31)     

HOUSEHOLD, GENDER, AND POLITICAL RESPONSES TO ECONOMIC DOWNTURN:

Although sociologists have given increased attention to political responses of populations experiencing economic restructuring, existing research remains conceptually limited. Building upon resource mobilization theory and longstanding structural approaches, we extend the conceptual discourse of mobilization by considering alternative bases of action involving the household and its gendered relationships. We provide an empirical example using data from a twelve-state midwestern sample of farm couples during the 1980s farm crisis. In addition to predictors outlined by conventional structural mobilization frameworks, we find that political socialization between spouses (an alternative, generally unexplored base of political action) is an important determinant of action. Relative to men, women tend to exert a more radicalizing political influence on their spouses.