Sociological explanations of economic growth

Even if questions of how resources aredistributed within and between societies are our main concern, we must continue to grapple with the issue of the causes of economic growth because economic growth and level of development continue to be among the most important causes of inequality, poverty, unemployment, and the quality of life. This paper’s dependent variable is the economic growth rate of 55 less developed countries (LDCs) during two time periods—1970–78 and 1965–84. The causal model consists of control variables—level of development and domestic investment in 1965—and a variety of independent variables drawn from major sociological theories of economic growth published during the last three decades. Multiple regression analysis shows that, net of the effects of the two control variables, the variables that have the strongest effect on economic growth rates are: (1) direct foreign investment, which has a negative effect; (2) the proportion of the population in military service; and (3) the primary school enrollment ratio, both of which have positive effects of economic, growth. On the other hand, variables drawn from some theories receive no empirical suport. The mass media of communications, ethno-linguistic heterogeneity, democracy and human rights, income inequality, and state-centric theory’s key variable—state strength—all fail to show any significant impact on economic growth rates when the control variables and the significant independent variables are held constant. The theoretical implications of these findings are discussed.     

Political instability and savings in less developed countries: Evidence from Sub‐Saharan Africa

A four‐equation model is used to investigate the effects of political instability (PI) on the savings rate in Sub‐Saharan Africa. Utilising a comprehensive measure of PI, we find that political instability has a deleterious effect on the savings rate both directly and indirectly through a reduction in investment and economic growth. The negative effects of PI on savings rate occurs contemporaneously as well as with a lag. We also find that economic growth has a stabilising effect on the political system and that not accounting for these effects through a simultaneous equations model results in biased coefficient estimates. These relationships are robust with respect to model specification. The implication of our results is that ‘economic factors’ alone cannot explain the development process in Less Developed Countries.     

Inequality and Economic Growth: The Empirical Relationship Reconsidered in the Light of Comparable Data

Almost all the recent empirical work on the relationship between income inequality and economic growth has used inequality data that are not consistently measured. This article argues that this is inappropriate and shows that the significant negative correlation often found between income inequality and growth across countries may not be robust when income inequality is measured in a consistent manner. However, evidence is found of a significant negative correlation between consistently measured inequality of expenditure data and economic growth for a sample of developing countries.     

Bureaucratic Corruption and Income: Evidence from the Land Sector in Bangladesh

We examine, for the first time, the effects of corruption on income using household survey data from a developing country. Estimating the effects of corruption on income is challenging because of the simultaneous relationship between the two variables. We use a two-step instrumental variable approach to identify the effects of corruption on income. We find that after adjusting for simultaneity bias the act of bribery reduces income and that higher bribes have a negative effect on income. Taken together, our results provide a possible explanation why a vicious cycle between corruption and income inequality does not exist in the land sector in Bangladesh.     

Institutions and Poverty

This study utilises eight alternative measures of institutions and the instrumental variable method to examine the impacts of institutions on poverty. The estimates show that an economy with a robust system to control corruption, an effective government, and a stable political system will create the conditions to promote economic growth, minimise income distribution conflicts, and reduce poverty. Corruption, ineffective governments, and political instability will not only hurt income levels through market inefficiencies, but also escalate poverty incidence via increased income inequality. The results also imply that the quality of the regulatory system, rule of law, voice and accountability, and expropriation risk are inversely related to poverty but their effect on poverty is via average income rather than income distribution.     

Does Changing Economic Well-Being Shape Resentment About Inequality in China?

The political consequences of income inequality in China have attracted increasing attention among researchers, and conventional wisdom states that economic development can mitigate negative views on inequality. I investigate the effects of subjective and objective changes in economic well-being on public opinion concerning income inequality based on a 2004 Chinese national survey. On the one hand, I find weak evidence of a negative correlation between perceived better economic well-being and negative opinion about inequality in China. On the other hand, I identify consistent evidence of a negative correlation between objective intergenerational upward mobility and negative views about inequality. It is worth noting that while the effect of intergenerational upward mobility is large, it is unable to completely reverse negative views about inequality among Chinese citizens. Hence, I suggest that economic development plays only a limited role in mitigating anger about inequality in China.     

Macroeconomic conditions and political instability: An empirical analysis

This article uses statistical methods to examine the relationship between two key macroeconomic indicators—inflation and economic growth—and four measures of political instability—peaceful unrest, violent unrest, coups d’etat, and changes of government. Using a panel research design and fixed effects regression analysis, I examine first whether contemporaneous relationships exist between these two groups of variables and then the direction of causality between them. Peaceful unrest clearly produces higher inflation and slower growth. Oddly, coups d’etat seem to producelower inflation, and there is some evidence that reverse causation may operate here as well—that high inflation mayreduce the likelihood of coups. Slow economic growth is associated with higher levels of violent unrest and a higher likelihood of coups and changes of government, but the direction of causality in these relationships is not clear. These findings, taken together, suggest that the relationship between macroeconomic conditions and political instability runs primarily from the latter to the former, raising doubts about the widely held view that poor economic conditions generally produce unrest and instability. Mark J. Gasiorowski is an Associate Professor in the Department of Political Science at Louisiana State University. He is currently working on a project focusing on the relationship between democracy and macroeconomic conditions.     

Realising the Public Person

In response to a crisis of representative democracy in many Western countries, (local) governments have introduced instruments to circumvent political parties in order to establish more direct links between citizens and governments. One of these instruments is rendering electoral systems more personal, that is by giving more weight to preferential voting. Preferential voting is important since it constitutes a major element of the personal vote and it determines whether parties or voters are the main decision-makers in designating representatives. We have investigated, in relation to the local elections in Flanders (Belgium), in what kind of municipalities voters are most likely to cast a preferential vote, whether the electoral reform granting voters more power has had an effect, and if it has had an effect, in what kind of municipalities. We have put forward five groups of explanatory variables: socio-demographic, political, social capital, geographic and ballot form variables. Our analysis shows that variables from each group correlate significantly with the percentage of preferential votes, with population density and electronic voting as most important variables. A comparison between the 1994 and 2006 elections often yields the reverse picture: characteristics of municipalities that have a positive effect on the percentage of preferential votes cast have a negative impact on the evolution of preferential voting and vice versa (electronic voting being an exception). This results in the only obvious effects of the electoral reform being seen in urban municipalities, because elsewhere local politics was already to a large extent personalised by politicians being locally known. We could conclude that in these rural municipalities the electoral reform was superfluous.     

Is There a Social Kuznets Curve? The Influence of Labour Standards on Inequality

This study empirically investigates the impact of core labour standards on income inequality for a range of 90 countries from 1990–2000. A synthetic index of labour standards is computed by means of a Multiple Correspondence Analysis and no significant correlation is found with the Gini index. One of the reasons pointed out is that the effective implementation of core labour standards depends on the quality of the country's political and legal systems. Using instrumental variables in a TSLS model, we found an inverse ‘U’ shaped curve between the new endogenous index of core labour standards and income inequality.     

Evaluating the Role of Subsidy Reform in Addressing Poverty Levels in Malaysia: A CGE Poverty Framework

Abstract

Malaysia as one of the top subsidised countries around the world has launched to reduce subsidies to capture its development goals. This study, therefore, analyses the effects of the subsidy reform on the macroeconomic, welfare and poverty levels of Malaysia by applying a CGE model. The findings suggest that subsidy removal leads to significant falls in both income and consumption of rural, urban and non-citizen households, and consequently decreases their welfare. However, poverty levels among rural households will most likely increase significantly when compared to urban households due to their relatively low level of income compared to other groups.     

Economic growth,income inequality and poverty in china under economic reforms

China's gross domestic product (GDP) more than quadrupled between 1978 and 1996 under economic reforms. Per capita disposable incomes more than tripled in the cities and almost quadrupled in the rural areas. However, rapid economic growth brought about large income inequality which slowed down poverty reduction. In 1995, there were still 70–170 million people living in poverty. This article aims to assess the relationship between economic growth, income inequality and poverty using both secondary and household survey data. The main findings are (1) urban/rural divide and spatial inequality are two major factors accounting for overall income inequality; (2) non‐wage and non‐farm incomes are more unequally distributed than wage and farm incomes; and (3) the incidence of poverty is very sensitive to the changes in per capita income and inequality.     

Export instability and the domestic economy: Questions of causality

The conventional view concerning the impact of export instability on the domestic economies of developing countries is one of pessimism. Export instability is thought to adversely affect the short‐run stability and longer‐run growth of income. Empirical evidence on these matters is, however, inconclusive. This article applies a Granger/Sims reduced form approach to examining whether export instability generates short‐run instability in domestic income. For each of a sample of 20 trade‐dependent countries the results obtained strongly support the contention that export instability induces short‐run macroeconomic instability.     

Labor union strength and human development in East Asia and Latin America

Ordinary least squares multiple regression is used to test the impact of labor movement strength on growth, income distribution, and premature mortality in sixteen East Asian and Latin American countries. Labor movement strength is measured by a new index based on information from the International Labour Organisation. Controlling for other relevant variables, the Labor Strength Index is found to have a weak positive effect on growth, a weak negative effect on income equality and on infant survival and life expectancy levels, and a strong negative effect on infant survival and life expectancy progress. One reason for the negative overall effect of labor strength on human development may be that unions, together with actors representing better-off urban groups, often induce governments to enact urbanbiased and formal sector-biased policies that contribute to the neglect or impoverishment of the rural poor and shanty-town dwellers. James W. McGuire is associate professor in the Department of Government, Wesleyan University, Middletown, CT, 06459. He is the author ofPeronism Without Perón (Stanford University Press, 1997) and of articles on parties, unions, and strikes in Argentina; transitions from authoritarianism in Latin America; and development in East Asia and Latin America.     

Income Inequality and Redistributive Spending: Evidence from Panel Data of Texas Counties

Abstract

The relationship between redistributive spending and income inequality has been of interest to researchers for several decades. Existing literature has largely focused on country-level studies and may be broadly divided into two groups: studies that find a positive relationship between the two and studies that find a negative relationship. The positive association is usually explained through the median voter theory and the negative association through the social insurance theory.

This study offers a test of the median voter and social insurance hypotheses by examining the relationship between economic inequality, voter turnout and redistributive spending at the sub-national level among the 50 largest counties in Texas over years 2006 to 2012. One of the advantages of using a regional sample is that counties are relatively more homogeneous and allow for the collection of better records across time. Random effects models suggest that income inequality is positively associated with redistributive spending. The study improves our understanding of the patterns of redistribution at the sub-national level and highlights the importance of careful inter-temporal modelling of relationships between redistributive spending and inequality.     

Social Inequality and Assessments of Democracy and the Market: Evidence from Central and Eastern Europe

Considerable comparative scholarly attention has been paid to various aspects of mass support for democracy and the market. However, despite strong theoretical suggestions of a linkage, little is known about the impact of social inequality on this support. We address this issue using evidence from mass surveys undertaken in 12 post-communist states in 2007, supplemented by country-level data about economic and political performance. Specifically, we investigate whether social inequality generates negative perceptions that democracy and the market will lead to social conflict and if it increases support for anti-democratic forms of governance. Notably, we find little link between citizens’ expectations of social conflict and national-level indices of income inequality. However, we do find a link between perceptions of the extent of social inequality and expectations of market-generated—but not democracy-generated—conflict. Underscoring these positive and negative findings, perceptions of social inequality are also clearly consequential for support for ‘strong-hand’ economic government but not for anti-democratic leadership.     

Conceptualizing and Measuring Ethnic Politics: An Institutional Complement to Demographic, Behavioral, and Cognitive Approaches

The influence of ??ethnic politics?? has been demonstrated in a range of empirical studies of economic growth, violence, and public goods provision. While others have raised concerns about the measurement of ethnic variables in these works, we seek to situate such discussions within a more thoroughgoing conceptual analysis. Specifically, we argue that four conceptual approaches??demographic, cognitive, behavioral, and institutional??have been used to develop theories in which the mechanism that relates causes to outcomes is ethnic political competition. Within this literature, we believe that institutional approaches have been relatively under-appreciated, and we attempt to address that imbalance. We begin by critically reviewing the three main ways in which ethnic variables have been specified and operationalized, delineating the assumptions and trade-offs underlying their use. Next, we describe an institutional approach to the study of ethnic politics, which focuses on the rules and procedures for differentiating ethnic categories. We propose some new indices based on this latter approach that might be developed and used in future research. Subsequently, we analyze the relationship between each of these approaches and patterns of ethnic political competition in a set of six country cases, highlighting their strengths and weaknesses, as well as theoretical links between them.     

Mass political interest (or apathy) in urban China

Based on our reassessment of existing studies on political interest and apathy in various societies, we argue the urgent need for a more systematic and focused examination of mass political interest—as psychological involvement in politics—in China. Utilizing data collected from a public opinion survey conducted in Beijing, China in late 1995, we intend to shed some light on the level and sources of political interest in contemporary China. Contrary to the prevalent argument that most Chinese are politically apathetic, we have found that there was a rather high level of political interest within our sample. We have also found that both conventional variables (i.e. age, gender, education, income, political efficacy, and dissatisfaction with government performance) and variables unique to the Chinese setting (i.e. being a farmer, becoming a private entrepreneur, joining the Chinese Communist Party and holding leading position in the party/government) have significant effects on the levels of political interest.     

Distributive Effects of Regional Trade Agreements on the ‘Small Trading Partners’: Mercosur and the Case of Uruguay and Paraguay

It is disputed whether trade liberalisation processes are sufficient for reducing poverty and inequality. We explore how ‘gains from trade’ have been distributed in the two minor trade partners of Mercosur, Uruguay and Paraguay, by analysing the impact of trade liberalisation on poverty and inequality through two main transmission channels: prices and income. In the case of Uruguay, trade liberalisation favoured a reduction in poverty indicators but had an almost zero effect on income inequality. In the case of Paraguay, trade liberalisation had a markedly negative impact in terms of poverty yet income distribution improved. We conclude that in the case of Mercosur, the effect of trade on poverty and income inequality varies per country and per region. In particular, we conclude that trade integration policies cannot be regarded as ‘poverty-alleviating’ per se.     

Employment,structural adjustment and sustainable growth in Mexico

To date the literature on subjective well-being has focused on the developed economies. We provide empirical evidence from two emerging market countries, Peru and Russia. Our results - and in particular a strong negative skew in the assessments of the respondents with the greatest income gains - support the importance of relative rather than absolute income differences. Among other factors, we attribute our results to shifts in reference norms and to macroeconomic volatility. Relative differences seem to matter more for those in the middle of the distribution than for the very wealthy or the very poor. Our respondents were more critical in assessing their progress vis-à-vis others in their country versus those in their community. The large and consistent gap we find between objective income trends and the subjective assessments of the upwardly mobile may have implications for the future economic and political behaviour of a group that is critical to the sustainability of market policies.     

Changes in human capital and earnings inequality: Recent evidence from Brazil 1

Abstract

This paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10-year period for Brazil. It uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality. Evidence points strongly to growing inequality in rates of return to education in Brazil. This finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled. Supporting evidence points to an improved competitiveness in the labour market, with workers increasingly rewarded for productivity. However, although increases in returns to education are more pronounced at the top of the earnings distribution, this did not in practice led to increased inequality. This is because levels of education and other labour market-rewarded endowments have increased and offset the rate of return effect. Appropriate education policy is therefore an essential partner for macroeconomic and trade reform if a developing economy is to avoid worsening income inequality.