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Political Economy of Institutions and Long Run Growth

Paper Session

Saturday, Jan. 6, 2018 2:30 PM - 4:30 PM

Marriott Philadelphia Downtown, Grand Ballroom Salon D
Hosted By: Association for Comparative Economic Studies
  • Chair: Charles Becker, Duke University

The Social Rationale for Bride Abduction

Charles Becker
,
Duke University

Abstract

We study the social rationale for bride abduction, which is practiced in parts of Central Asia and elsewhere. Strong empirical evidence, detailed in Becker, Mirkasimov, and Steiner (Demography, forthcoming), exists that this practice is not simply elopement but a form of forced marriage with adverse consequences. It is shown that children born in kidnapped marriages have lower birth weight than children born in other types of marriage.

This fact suggests that we ought to ask why kidnapping is socially tolerated. We build a matching model with search costs in which older generations (who control social norms) have an interest in accelerating the marriage process for younger generations (who control marriage decisions) and can use the mandate that a prospective groom abduct a bride by a certain date as an enforcement mechanism to deter unduly long search processes.

This model also helps explain the apparent anomalous presence of bride abduction in Kyrgyzstan, where Kyrgyz women appear to have more autonomy, education, and social status than their peers in most other Central Asian cultures. Our model predicts that abduction is most likely to occur in societies where marriage search costs are high and young adults have substantial autonomy – a setting consistent with rural Kyrgyzstan, and especially in sparsely populated areas with substantial gender imbalances. Moreover, the existence of large migrant labor flows may actually exacerbate abduction, as it may encourage prospective brides to wait for the arrival of prospective husbands in subsequent periods.

The Long Run Effects of R&D Place-based Policies: Evidence From Russian Science Cities

Helena Schweiger
,
European Bank for Reconstruction and Development

Abstract

We study the long run effects of a unique historical place-based policy targeting R&D: the
creation of “Science Cities” in former Soviet Russia. The establishment of Science Cities and
the criteria for selecting their location were largely guided by political and military-strategic
considerations, in addition to economic ones. We compare the current socio-economic
outcomes of Science Cities to those of appropriately matched localities that were similar
to them at the time of their establishment. We find that in the modern Russian economy,
despite the massive cuts in governmental support to R&D that followed the dissolution of
the USSR, Science Cities still host a more educated population, apply formore patents, and
do better in terms of several proxies of economic development with respect to matched
controls; but they are not significantly more populous. These findings are consistent with a
long-run shift of the spatial equilibriumdue to a combination of barriers to labour mobility
and localised knowledge spillovers. By analysing firm-level data, however, we obtain only
mixed evidence in favour of the existence of spillover effects with a large spatial breadth.

Do Democratic Transitions Attract Foreign Investors and How Fast?

Pierre-Guillaume Méon
,
Free University of Brussels

Abstract

This paper investigates the evolution of foreign direct investment inflows (FDI) around democratic transitions, in a panel of 115 developing countries from 1970 to 2014, using an event-study method. We find that democratic transitions on average do not affect FDI inflows. We then focus on consolidated democratic transitions, defined as transitions that did not reverse during at least five years. We find that consolidated democratic transitions do increase FDI inflows, with the bulk of the improvement appearing ten years after the transition. Furthermore, when controlling for political risk, the effect of consolidated democratic transitions appears immediately after the transition, suggesting that higher political risk accompanying the early years of democratic transitions offsets their positive intrinsic effect on FDI. The results are robust to changing the set of control variables, to alternative codings of the variables capturing the transition, disaggregating political risk into several sub-components, and the exclusion of outliers. Moreover, local projections, propensity score matching, and IV estimates lend credence to a causal interpretation of the results.

The Dynamics of Tax Morale in Transition Countries

John Anderson
,
University of Nebraska

Abstract

Effective administration of tax systems requires both compliance and enforcement efforts and a culture of compliance based on social norms contributing to strong tax morale. This is true both for advanced industrialized nations and also for emerging markets and transition countries where a taxpaying culture did not exist in the former regimes. Transition with more liberal economic regimes and political freedoms brings the development of explicit tax systems and the need to foster tax morale to support effective revenue collection. Experience with transition indicates that the development of strong tax morale has generally improved over time, but significant differences exist across regions and countries. The purpose of this study is to empirically analyze the dynamic changes in tax morale within and among transition countries over the period 2010-2016.
I use data from the 2010 Life in Transition Survey (LITS II) and the newly released 2016 Life in Transition Survey (LITS III) to analyze changes in tax morale. The surveys provide information on attitudes toward paying taxes, tax evasion behavior, informal payments to tax officials, and other factors influencing tax morale. These data sets are used to estimate empirical models of tax morale among transition countries.
Determinants of both weak and strong tax morale are explored, including individual and country characteristics capturing features of country tax systems, level economic development, social cohesion, economic freedom, and other factors. I also exploit differences across time in order to analyze the direction of dynamic changes in tax morale attitudes.

When Political Supply Creates Its Own Demand: The Case of Anti-EU Politics in Visegrad Countries

Boris Najman
,
University of Paris-Est

Abstract

This paper present the main reasons of anti EU political trends in Visegrad countries (V4). We present the recent V4 political trends, analyse the strength or counter powers and develop and explanation of the national populist parties recent political success. We use Eurobarometer micro data to test econometrically our assumptions. In the context of weak counter power, instability and threats during the campaign, national populist supply creates its own demand.
“For if the future European order does not emerge from a broadening European Union, based on the best European values and willing to defend and transmit them, it could well happen that the organization of this future will fall into the hands of a cast of fools, fanatics, populists and demagogues waiting for their chance and determined to promote the worst European traditions. And there are, unfortunately, more than enough of those.”
Vaclav Havel Speech to European Parliament, March 1994
JEL Classifications
  • O0 - General
  • P0 - General