An empirical analysis of South Korea's economic development and public expenditures growth

Economists and political scientists have long maintained that there exists a one-way relationship between the size of government and economic growth. That is, it is hypothesized that economic growth is the cause of government expenditure growth and not the other way around. New research, based on the Keynesian paradigm, suggests that the causality runs from growth in government spending to growth in GDP. Concern with causality has spawned a growing body of new research by Landau (1983 and 1986), Kormendi and McGuire (1985), Singh and Sahni (1984), Marsden (1984), Conte and Darrat (1988), and Ram (1986). While some of these studies support the Keynesian paradigm, others find contrary evidence.In this study, we use Korean data to conduct causality tests of Wagner's law. Further, we develop a model consisting of a government growth equation and a GDP growth equation. Again, using Korean data, we estimate these equations and compare the results with those of Wagnerian causality tests. We conclude that the Korean government expenditures have not contributed to economic growth.     

DEMOCRACY AND GROWTH: A PERSPECTIVE FROM DEMOCRATIC EXPERIENCE

This article investigates the impact of democracy on growth by simultaneously considering a country's secular‐historical experience of democracy and current political regime. The results obtained show that the effect of democracy on growth exhibits an asymmetrical pattern depending on the country's democracy stock. Only in “democratic countries” with “prolonged experiences of democratic rule” can democracy promote growth. This claim stands in contrast to the earlier literature in which there is either no consistent relationship between growth and democracy or perhaps a nonlinear relationship. This conclusion provides circumstantial support for the claim of the “democracy promotes growth” hypothesis. (JEL O43)     

THE VALUE OF RISK: MEASURING THE SERVICE OUTPUT OF U.S. COMMERCIAL BANKS

Banks often charge implicitly for their services via interest spreads, instead of explicit fees. Much of bank output thus has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find that in the U.S. National Accounts between 1997 and 2007, bank output was overestimated by 21% and gross domestic product (GDP) by 0.3%. Compared with current methods, our new estimates imply more plausible estimates of the income share of capital and the return on fixed capital of the banking industry. (JEL E01, E44, O47)     

我国城市社区民主治理的困境与出路

积极推进城市社区民主治理对我国民主政治建设和法治进程具有重要而深远的影响,但宥于我国历史传统和民主法治国情,城市社区民主治理仍存在民主权利与民主需求、民主需求与民主实践、民主实践与民主权利之间不相协调一致的问题,使得社区民主治理陷入“权利-需求-实践”的困境,这严重阻碍着中国城市社区建设及基层民主政治的健康发展。当务之急是结合我国实际,完善民主权利,满足民主需求,深化民主实践,积极探索具有我国特色的城市社区民主治理之路。     

The Case for Utopia: History and the Possible Meanings of Brexit a Hundred Years On

How likely are utopian futures of the kind that Jeremy Corbyn has recently envisioned for the future of post-Brexit Britain? Such utopian scheming to restore the welfare state at the cost of the state gibes with the forecast of austerity from the Chancellor’s office, and pronouncements from canny observers that a post-EU Britain will need cash to support even its current programs, and therefore be forced to come to terms with the demands of banks and corporations. Corbyn’s utopianism is ridiculous unless we take into account long-term forces like the rebellion against expert rule and advocacy of democratic accountability by participatory movements. A deeper history of state, democracy, and expert rule in Brexit can highlight the underlying tensions and point to some sources of possible outcomes.     

A clash of civilizations? Examining liberal‐democratic values in Turkey and the European Union1

Turkey's proposed entry into the European Union (EU) has been undermined by Europeans’ perceptions of Turkish–European cultural differences, particularly regarding the liberal‐democratic values that the EU promotes (democracy, rule of law, and respect for and appreciation of minority/human rights). Yet, cross‐national research on values has not focused on Turkey, the EU, and these liberal‐democratic values, leaving assumptions of cultural differences and their explanations untested. Through analyses of World and European Values Survey data (1999–2002), this article asks whether people in Turkey have the same values regarding democracy, rule of law (versus religious and authoritarian rule), and minority/human rights as people in EU member and candidate states (as of 2000)? What factors explain these values? I find that people in Turkey support democracy to the same extent as people in EU member and candidate states, but people in Turkey are more supportive of religious and authoritarian rule and are less tolerant of minorities. Although the ‘clash of civilizations’ thesis expects liberal values to be ordered according to countries’ religious traditions, with western Christian the most supportive and Islamic the least, only for tolerance of minorities values is this pattern found. Instead, economic development most consistently explains differences between Turkey and EU member and candidate states in support for these values. I conclude with calls for theoretical refinement, particularly of the clash of civilizations thesis, along with suggestions for future research to examine more Muslim and Orthodox countries; I discuss the debate over Turkey's EU entry.     

The Quest for Government Accountability and Rule of Law: Conflicting Strategies of State and Civil Society in Cambodia and Serbia

This article deals with the social accountability activities of civil society organizations in Serbia and Cambodia. In both countries, they emerged with the conceptual and financial support of international development agencies; yet, the outputs were mediated by the social and political contexts. Still, these activities have some joint features: they (1) boost both understanding and awareness rather than solely mobilizing social interests; (2) target the interests of individual citizens rather than the interests of social-based groups or classes; (3) promote state cooperation instead of confrontation and (3) insist on the use of technical policy-related tools and mechanisms instead of political mobilization. The social accountability initiatives analyzed here have followed a policy-not-politics or depoliticized approach. As a consequence, they were ineffective in mobilizing citizens and social groups in a manner that would efficiently demand more accountability. On the other hand, governments contested civil society and appropriated its accountability discourses and strategies in an effort that can be read as an attempt to resist imposing government accountability and rule of law and pacifying present and future civic activism.     

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).     

THE CREDIT‐CHANNEL TRANSMISSION MECHANISM AND THE NONLINEAR GROWTH AND WELFARE EFFECTS OF INFLATION AND TAXES

With the credit‐channel effect driven by the central bank's open market operations, this paper's model easily gives rise to the nonlinear inflation‐growth nexus, which is evidenced by a number of cross‐country empirical studies. The threshold level of the inflation rate is found to be lower when tax rates are higher. The presence of the credit‐channel effect also provides the rationale for setting positive (and smaller than 1) tax rates on consumption, labor income, and capital income. The optimal tax rates rise as the inflation target declines. Under a fiscal policy rule where labor and capital income taxes move proportionally to each other, the optimal capital income tax rate could be higher than the optimal labor income tax rate. Under a sufficiently large central bank balance sheet, the credit‐channel effect will be so weak that inflation and all kinds of taxes are growth and welfare repressing. This provides a rationale for central banks that have implemented quantitative easing policies to shrink their balance sheets. (JEL E58, E62, O42)     

A legal realist view on citizen actions in Hong Kong's umbrella movement

This article considers the legal validity of citizens' actions in civil disobedience as it pertains to the umbrella movement in Hong Kong. It introduces the critical approach of “legal realism” in order to reconsider normative law, such as police enforcement and court interventions, in relation to political struggle. It has been argued that the legal precepts of rights, responsibility, and the rule of law are capable of contingent and contextually appropriate interpretations by different legal actors, including citizens who participate in civil disobedience. In politics, justice, and most importantly law, civil disobedience offers an alternative legal normativity to consider the citizen's right, and even duty, to express dissent. Furthermore, this right or duty is legally persuasive and conducive to guarding democratic principles.     

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)     

Governing police practice: limits of the new accountability

The advent of public-sector managerialism has brought with it a new principle of police accountability in Western democracies such as Australia and Britain. The new accountability gives emphasis to managerial rather than legal or public-interest standards, favours external oversight combined with self-regulation rather than centralized control, and promotes risk management rather than rule enforcement. This article makes use of the experience of an Australian police force to show that the new accountability has not been successful in holding police accountable, while elements of the old accountability have re-emerged to dominate public debates. It is argued that in the area of police governance, the neo-liberal state does not necessarily pursue a coherent strategy of 'acting at a distance' (cf. Miller and Rose 1990), partly because of the inability of accountability technologies to deliver substantially the promised policy outcomes and partly because of the sensitivity of its political arm to the public's moral outrage against corruption (cf. Garland 1996).     

Making democracy matter: Responsibility and effective environmental governance in regional Australia

This paper will critically examine the changing social relations of responsibility associated with Australia's current regional ‘experiment’ in environmental governance. This experiment centrally involves the transfer of responsibility for natural resource management (NRM) from Federal and State governments to community-based regional bodies. Although governments are promoting democratic NRM planning at the regional level as a more effective means of addressing Australia's environmental problems, we argue that a tension is emerging in association with the simultaneous pursuit of these goals: ‘effectiveness’ has been defined in terms of the accountability of regional communities to central governments for the achievement of short-term results, an approach which is undermining the democratic promise that regional bodies would be responsive to wider community concerns. The notion of ‘responsibility’ provides a means of investigating this tension, as accountability and responsiveness are both elements of the overarching concept of responsibility. The examination of NRM institutions through this theoretical lens indicates that the shared substantive interests required to motivate a sense of shared responsibility amongst regional actors have been sidelined by the procedural demands of accountability. We argue that, if NRM planning is to be genuinely accountable and responsive to substantive public ends, the properly social and dialogical nature of responsibility relationships must be recovered. The paper concludes with a discussion of the social and political relations of responsibility that appear to provide the best opportunities for effective environmental governance, and thus for the achievement of more sustainable NRM outcomes, at the regional level.     

WHY DON'T POOR COUNTRIES CATCH UP? A CROSS-NATIONAL TEST OF AN INSTITUTIONAL EXPLANATION

Early neoclassical analyses predicted that poor countries would grow faster than wealthy countries, because of technological advances and diminishing returns to capital in the latter. The reverse has occurred: poor countries are falling back rather than catching up. We suggest here that deficient institutions underlie this divergence. Employing various indicators of institutional quality, including the rule of law, the pervasiveness of corruption, and the risk of expropriation and contract repudiation, we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place. (JEL O00, O10)     

Racial accountabilities: the legal legibility of racial state violence in the Special State’s Attorney Report on Police Torture in Chicago

Public inquiries command significant political capital for liberal democratic states that premise their authority on being accountable to a generalized public sphere. By attending to the particular relations of visibility that are generated by these investigative state institutions, this article reveals the differentiated forms of legal and political accountability that structure the proceedings and case history of the 2006 Special State’s Attorney Report, which investigated the torture of African American suspects by Chicago police officers under the supervision of former Commander Jon Burge. More specifically, this article documents the racial relations of power that shape how state actors and institutions are made to answer for their conduct, explicating the ‘racial accountabilities’ that mediated this public inquiry as well as the practices of state violence it was tasked with investigating. On the one hand, these forms of accountability focused blame on the individualized actions of particular state actors, abstracting their conduct from the broader systemic conditions that have rendered African American populations vulnerable to racial state violence. On the other hand, this article explains how the forensic gaze deployed throughout the legal investigations into torture reconstituted its victims as objects of law with differential access to its forms of protection and technologies of redress. By detailing the force and dimensions of these racial accountabilities, this article illustrates how public inquiries and other institutions of law can reproduce and extend racial fields of violence while also regenerating public confidence in the efficacy and equality of the state.     

NONLINEAR BUSINESS CYCLE DYNAMICS: CROSS-COUNTRY EVIDENCE ON THE PERSISTENCE OF AGGREGATE SHOCKS

We look for asymmetries in the dynamics of real GDP growth for the G7 countries, using a model by Beaudry and Koop that allows the depth of a recession to influence the rate of growth of output. We find evidence supporting these nonlinearities in four countries, including the United States, but we do not find evidence that the asymmetries are common even among the four countries exhibiting asymmetric behavior. A modification of the model to distinguish between the recession and recovery phases of a business cycle does not change this general finding. The asymmetries discovered by Beaudry and Koop do not appear to be common among the G7 nations. (JEL E32)     

Social accountability as social movement outcome: Protests in a Chinese city

ABSTRACT

Social accountability is a concept that has been used much in development studies and democratic theory to study informal ways for civil society to achieve social change and hold governments accountable. Surprisingly, it has been far less used in social movement scholarship and we argue that social accountability, understood as a combination of answerability, legal claim attainment, and sanction, is a useful way to examine social movement outcomes in China. Social accountability directs the focus of research towards the target of protest and not only whether the protest resulted in policy changes or not. Based on field work in 2013–2015, this article examines four cases of social protests in the Chinese city of Hangzhou. In line with previous research we find that when citizen claims accord with government policies and protesters are well-organized, local authorities tend to accommodate the protesters’ claims. However, answerability and sanction do not always follow the same pattern. Answerability can be relatively high also when legal claims are unsuccessful. This means that cases that are commonly seen as unsuccessful protests because the legal demands were not accommodated may still result in partial social accountability. In addition to the presentation of original empirical findings, the study makes a theoretical contribution by linking the two research fields of social movement and social accountability, which will be of interest to a wider scholarly audience.     

Resource allocation and economic growth in China

This article shows that the allocation of resources among enterprises of different types of ownership is important to economic growth. The data on 30 Chinese provinces indicate that the investment share of state enterprises is negatively related to the growth rate of per-capita GDP, while the investment share of private enterprises is positively related to the growth rate. Meanwhile, the effect of total investment on the growth rate of per capita-GDP appears to be insignificant. The share of trade in GDP was positively related to economic growth. Also, the illiteracy rate of employees was negatively related to economic growth.     

THE STATE'S INTEREST SEEKING AND ECONOMIC STAGNATION IN THE THIRD WORLD:

In the development literature, the state's interest seeking is considered a crucial determinant of economic stagnation in the Third World. The internality inefficiency, opportunity costs, and structural disincentives generated by such a state constitute the key mechanisms responsible for slow growth. This study provides a major quantitative test of this hypothesis. A sectoral approach is proposed to measure the interest seeking of the state by using the central government expenditures for state employees' wages and salaries as an indicator. As the analysis of pooled data from fifty-five less-developed countries reveals, high expenditures on salaries impeded the GDP growth rate in 1970–1990. In response to the argument that the African economy is more vulnerable to state predation, this regional effect hypothesis is further tested with an interaction model. The results reveal that the harmful growth effect of the state's interest seeking cuts across varied regions and can be generalized.     

GROWTH AND CONVERGENCE WHEN TECHNOLOGY AND HUMAN CAPITAL ARE COMPLEMENTS

This article presents a model of endogenous growth, in which a firm's technology and a country's human capital stock are complementary in the production of output. Production technologies are created by costly research and development (R&D) and are owned by firms that can freely choose where in the world to produce. Both production and R&D have a positive effect on a country's human capital stock. While all countries typically grow at the same rate in the long run, they differ in their levels of human capital, per capita output, and the quality of the technologies that are used in production. A country's relative position in terms of productivity is history dependent. Countries that start out with a lower human capital stock or industrialize later end up with a lower per capita GDP in long‐term equilibrium. (JEL O4, O33, O47)