SOCIAL CAPITAL,ECONOMIC DEVELOPMENT,AND THE QUALITY OF GOVERNMENT: HOW INTERACTION BETWEEN SOCIAL CAPITAL AND ECONOMIC DEVELOPMENT AFFECTS THE QUALITY OF GOVERNMENT

This study investigates the relationship between social capital and governmental quality by considering the relationship between social capital and economic development in a cross‐section of countries. It is shown that countries with both high levels of social capital and economic development exhibit higher quality of government as measured by government effectiveness, rule of law, impartiality, professionalism, and a governmental quality index. It is also shown that countries with both high levels of social capital and low levels of economic development are associated with higher governmental quality as measured by professionalism. These findings question the use of heterogeneous indicators for governmental quality and show that the relationship between social capital and the quality of government depends on the level of economic development. Thus, the importance of the level of economic development in explaining the variation in the quality of government sheds light on the social capital theories of governmental qualities.     

Real and nominal determinants of real exchange rates in Latin America: Short-run dynamics and long-run equilibrium

This article analyses the factors that determine the long-run real exchange rate in Argentina, Colombia and Mexico, distinguishing between real and nominal determinants. Cointegration analysis is utilised to establish that the real exchange rate has an equilibrium relationship with real variables (the terms of trade, capital flows, productivity, and government share of GDP) which excludes nominal variables (nominal exchange rate, money) and central bank intervention. Variance decompositions reveal that among the real variables that determine the real exchange rate, the terms of trade and productivity explain much of the variation in the real exchange rates. When nominal variables are included in the model, the nominal exchange rate accounts for most of the variation in the real exchange rates of all three countries. The impulse response functions are broadly consistent with theoretical predictions and shocks to the nominal variables have only transitory effects on the real exchange rate.     

Access to credit for non‐formal micro‐enterprises in Botswana

The literature on micro‐enterprises identifies a lack of capital as a primary constraint to enterprise development. Potentially, Botswana could be different as the commercial banking system has excess liquidity and the government has established relevant lending institutions and several financial assistance programmes. On the basis of a 1992 survey of 1,140 micro‐enterprises engaged in non‐formal activities in seven urban centres and villages in Botswana this study finds the situation in Botswana to be similar to the conclusions reported in the literature for other countries. There is a need for institutional changes which channel loanable funds to micro‐enterprises in a manner that addresses their respective capital constraints and encourages the entrepreneurs to become responsible savers and borrowers. The article draws on the literature and on the experience of several successful micro‐enterprise loan schemes to outline the essential features of needed programme delivery changes.     

General Trends and Causes of High Compensation of Government Managers in the OECD Countries

Government managers play a central role in the public administration of countries to support their overall efficiency. The compensation of central government senior managers has received considerable attention in recent years since it has risen in many countries. The public, the media and academia see government senior managers as being overpaid, with salaries increasing in a disproportionate and inequitable way. The literature has analyzed some possible determinants of this socio-administrative issue. However, the political and institutional factors affecting public managers’ compensation are still largely unknown. This study shows that the average compensation of central government senior managers in some OECD countries seems to be positively associated with the average salary of members of parliament (MPs). Furthermore, high compensation of public managers seems to be more frequent in countries with low freedom of expression, of association and of the media, as well as low quality of contract enforcement, property rights and control of corruption. These results may provide fruitful insights into the possible causes of this relation, to support reforms and best practices which can improve the efficiency of the public administration in modern economies.     

Monetary policy in europe: towards a european central bank and one european currency

Most alternative blueprints for European Monetary Union (EMU) differ in their opinions about convergence requirements or the need for binding fiscal rules and controls of individual national governments' debt policies, but there is, if not complete consensus, widespread agreement that the European Central Bank (ECB) should be independent of political control from both European Community (EC) institutions and national governments. The main argument for an independent European central bank is empirical: those countries in which central banks are insulated from the political process and charged with maintaining price stability have experienced the lowest and most stable inflation rates in recent decades. The present paper reviews and critically evaluates this political economy literature which relates inflation performances to the constitutional features of central bank statutes. Based on this assessment the draft statutes of the ECB and the constitutions of the individual European national central banks are discussed in terms of the independence they grant central bank board members from partisan influences. Furthermore, concrete country-specific suggestions for enhancing central bank independence during stage two of the gradual transition to EMU, which is to be completed by 1999, are made. It is argued that in some countries laborious constitutional reforms of central bank statutes are overdue and must be implemented in order to make these institutions fit for an anti-inflationary EMU.     

Fixed capital stock depreciation in developing countries: Some evidence from firm level data

Abstract

Previous growth accounting studies suggest severe capital underutilisation and mismeasurement of the stocks of capital in some developing countries. Using the firm level data sets from the World Bank surveys, this paper estimates the economic depreciation rates of fixed capital stocks in the manufacturing industries of seven developing countries. The findings indicate that the stocks of fixed capital may depreciate at higher rates in these countries, as compared with the normal rates usually assumed for advanced industrial countries. This study also discusses the economic and social forces that may influence the incentive to maintain capital appropriately and the implications of high depreciation for the total factor productivity (TFP) growth estimates and volatility of capital accumulation.     

Attitudes toward immigrants and immigration policy in Asia and the Pacific: a quantitative assessment of current theoretical models beyond western countries

This article empirically assesses the validity of current theoretical models of attitudes toward immigrants and immigration policy in the Asia-Pacific region. This paper takes representative data from the World Values Survey and implements a multilevel model to test five of the main theories in the literature: the human capital theory, the social capital theory, the political orientation theory, the contact/group threat theory and the economic competition theory. The results from the analysis lend credence to the important effects of human capital, social capital and political-ideological variables on respondents’ attitudes toward immigrants and immigration policy. However, the results provide mixed and weak evidence for the contact/group threat theory and the role of economic determinants. Importantly, economic determinants tend to be more powerful in shaping people's attitudes toward immigration policy than shaping attitudes toward immigrants as people. Altogether, this article sheds new light on the validity of current theoretical models based on western countries for other areas of the world. Finally, the results from the paper also support the usefulness of non-economic, as opposed to purely economic, models in the understanding of individuals’ attitudes toward immigrants and immigration policy in the Asia-Pacific region.     

How successfully do we measure capital flight? The empirical evidence from five developing countries

Economists have proposed several different techniques for measuring capital flight. Each technique differs significantly in its definition of what constitutes capital flight, principally on the limits to normal capital flows, how to capitalise investment income, and the inclusion of long term capital flight. Consequently estimates of the determinants and remedies for capital flight have been very mixed. Given that capital flight is not observable it is important to examine the information content and consistency between the different measures. This article uses three different techniques over five countries to make that comparison, and finds a limited amount of information in each measure but no obvious agreement between them. Econometric techniques which have been designed for measuring the ‘hidden economy’ of OECD countries is likely to offer a better way of measuring capital flight.     

Away From Home: Somali Women's Mediated Entry Into the United Kingdom

Based on in-depth interviews with 26 Somali women refugees, this article discusses structural arrangements around their settlement in the United Kingdom (UK). Their “male-centered” migration can be viewed as a specific form of patriarchal institution where men control women's trajectories. Based on Bourdieu's concept of social capital, I introduce a new category of knowledge capital—supplementary capital—to discuss sociocultural/political stratifications that affect integration of my informants in the UK. I show how a lack of familiarity with the dominant language became central to their integration difficulties. These underexamined problems are key factors in immigration processes.     

Higher education and economic growth in Africa

This paper uses panel data over the 1960–2000 period, a modified neoclassical growth equation, and a dynamic panel estimator to investigate the effect of higher education human capital on economic growth in African countries. We find that all levels of education human capital, including higher education human capital, have positive and statistically significant effect on the growth rate of per capita income in African counties. Our result differs from those of earlier research that find no significant relationship between higher education human capital and income growth. We estimate the growth elasticity of higher education human capital to be about 0.09, an estimate that is twice as large as the growth impact of physical capital investment. While this is likely to be an overestimate of the growth impact of higher education, it is robust to different specifications and points to the need for African countries to effectively use higher education human capital in growth policies.     

Savings,investment and foreign capital flows: Have capital markets become more integrated?

How mobile is capital across countries? Does the expansion of world financial markets in the 1970s and 1980s reflect a tendency towards one integrated world capital market, accessible for both industrialised and developing countries? Or, alternatively, are savings and investment rates for each economy closely tied because of international capital market imperfections? This article critically assesses recent studies that have tested these hypotheses empirically for industrialised countries, presents new evidence and expands data analysis to include the group of developing countries. Contrary to recent studies it is concluded that across industrialised countries domestic investment and savings are now much less closely linked than in the 1960s. But the larger capital market integration does not extend to the group of developing countries despite their increased use of funds from international financial markets to finance domestic investment. The exploratory nature of the data analysis only permits to draw some suggestive, though important, conclusions for economic theory and policy.     

Aid and Resource Mobilisation in Sub-Saharan Africa: the Role of Reverse Flows

This article seeks to ascertain the role of ‘reverse flows’ in explaining the observed limited impact of aid on resource mobilisation in Sub-Saharan Africa. It departs from the previous empirical literature on aid and resource mobilisation by abandoning the pervasive, but untenable, assumption that aid either displaces domestic saving (increases consumption) or increases investment. Some aid is, in fact, used to finance reverse flows (debt servicing, capital flight, and reserve accumulation). The evidence suggests that, for the period covering 1980 to 2006, nearly 50 per cent of aid to Sub-Saharan African countries was used to finance reverse flows.     

Senior Public Managers’ Engagement: A Person–Situation-Interactionist Perspective

This article examines the engagement of senior public managers by developing a person–situation-interactionist perspective. It integrates the literature on social exchange theory and person–organization fit to explore the effects of decision autonomy and shared vision on the engagement of more than 2,000 senior public sector managers in the central government agencies of three continental European countries: France, Germany, and The Netherlands. Then, it examines whether the locus of control of those managers moderates the decision autonomy–engagement and shared vision–engagement relationships. The structural equation modeling results suggest that there are positive relationships between both decision autonomy and shared vision and employee engagement. Further analysis revealed that an internal locus of control strengthened the decision autonomy–engagement relationship, but that it weakened the shared vision–engagement relationship.     

The relevance of basic needs for political and economic development

This article addresses the “basic needs’ approach to development policy from the perspectives of the political and economic development literature. The central questions concern the compatibility of a basic needs approach with political and economic development and the impact of development on population welfare. Will a basic needs approach weaken or strengthn the processes of legitimation and state consolidation in developing systems? What impact will it have on participation and democracy? What will be the impact of such an approach upon attempts to industrialize and diversify production? While there are no definitive responses to these concerns the literature suggests that the approach has real potential value both for improving “human capital” and strengthening economic development, and for developing locally based political institutions.     

Determinants of educational outcomes: Analysis of the Republic of Tatarstan

This paper studies the determinants of educational outcomes in the Republic of Tatarstan, Russia. Using principle component analysis, least squares with robust standard errors, and probit models, I found that family resources, including socioeconomic status, cultural and social capital, show a statistically significant effect on educational achievements and plans about educational trajectories. However, little of the variation in the dependent variables can be explained by variation in family resources. In Tatarstan, as in developed countries, family resources have a low influence on educational outcomes. Moreover, school quality, gender, nationality, peers, health, plans about future work, and other physical and psychological factors play important roles in influencing educational outcomes. Girls obtain better results than boys, and Tatar speakers show higher educational achievements than Russian speakers.     

Second‐hand machinery in development,or how to recognize a bargain

In the literature on economic development and planning, much is made of the problem of ‘choice of technique'—choosing either capital or labour intensive techniques. In this paper the focus is on another aspect of this problem—the choice among capital inputs, the selection of new or second‐hand equipment. As much of the investment in the less developed countries depends on imported machinery, the problem becomes that of making the most efficient use of foreign exchange. The question is relevant as a number of developing countries have imposed prohibitions on the importation of used machinery.

First we examine the theoretical implications of the availability of both new and used machines for the production possibilities and the effects of various trade policies on the selection of production technique. Integrating this question of new versus used machines with investment criteria, we then examine situations in which used machinery might be preferable to new.     

Which Institutions are Good for Your Health? The Deep Determinants of Comparative Cross-country Health Status

We extend the literature on the deep determinants of economic development by focusing on life expectancy, instead of income per capita, as an indicator of economic development, and by examining the role of informal, as well as formal, institutions. Our empirical results suggest that formal and informal institutions are substitutes. Improving informal institutions has positive effects on life expectancy that are statistically significant for most countries and stronger than the effects of improving formal institutions. The gains from improving informal institutions are greatest for countries in which institutions are weakest. Geographical factors also help explain cross-country variation in life expectancy.     

Financial Inclusion and Human Capital in Developing Asia: the Australian connection

The Australian government as part of its aid programme allocates large funds to improve financial inclusion in developing countries. However, this does not take into account low educational levels in these countries. The existing literature on financial inclusion also treats the issue as mainly supply-centric and does not take cognisance of the fact that poor human development and high illiteracy levels in developing economies may prevent a large section of the population from benefitting from financial inclusion efforts, because of low awareness and comprehension of the financial services available. This study uses a detailed three-stage methodological approach to examine the relationship between financial development and human capital in 21 countries of developing Asia. The results show that a significant negative relationship exists between financial development proxied by M2/gdp and pupil:teacher ratios and a strong positive relationship exists between physical access to banks and expected years of schooling. Further, our financial development and educational development indices also show no clear pattern in the selected countries' financial and educational development.     

Actual,desired and full levels of capital utilisation in Malaysian manufacturing

This paper shows that capital utilisation in West Malaysian manufacturing, though higher than that in other less developed countries, still leaves capital plant idle for a considerable proportion of the total available time. These findings, based on a modified McGraw‐Hill measure and on the Winston time‐measure of capital utilisation, therefore calls into question the wisdom of an industrial investment incentive programme which aims primarily at maximising the volume of capital expenditure, and which pays no attention at all to the level of utilisation of the existing stock of capital.     

Robbing the Riches: Capital Flight,Institutions and Debt

Capital flight undermines economic growth and the effectiveness of debt relief and foreign aid, and sometimes drains more resources from poor countries than does debt service. In an analysis of a large panel of developing and emerging market countries using annual data for 1970–2001, we show that both institutions and macro policies robustly affect capital flight. Our study also supports the existence of a revolving door relationship between debt and capital flight. More notably we find countries with weak institutions have a greater propensity to accumulate debt because weak institutions spur capital flight, which, in turn, creates a financing need.