Can foreign aid reduce income inequality and poverty?

This paper’s goal is to examine the effect of foreign aid on income inequality and poverty reduction for the period 1971–2002. Since simple cross-country regressions cannot be taken as ‘true’ time series findings we focus on dynamic panel data techniques, which allow accounting for potential simultaneity and heterogeneity problems. We find some weak evidence that foreign aid is conducive to the improvement of the distribution of income when the quality of institutions is taken into account; however, this result is not robust. This finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions.     

Inequality in developing economies: the role of institutional development

This paper studies the distributive impact of institutional change in developing countries. In such economies, property rights systems may preserve the interests of an influential minority, who can control key-markets, access to assets and investment opportunities, especially if they enjoy disproportionate political power. We test this hypothesis using cross-section and panel data methods on a sample of low- and middle-income economies from Africa, Asia and Latin America. Results suggest that: (a) increasing property rights protection increases income inequality; (b) this effect is larger in low-democracy environments; (c) some countries have developed political institutions capable of counterbalancing this effect.     

More Inequality,More Killings: The Maoist Insurgency in Nepal

The hypothesis of inequality as the source of violent conflict is investigated empirically in the context of killings by Nepalese Maoists in their People's War against their government during 1996–2003. The dependent variable is the total number of people killed during that period by Maoist rebels in each of 3,857 villages. Inequality is measured by the Gini, the Esteban‐Ray polarization index, and four other between‐groups indexes. Using models with district fixed effects, and instrumenting for endogeneity of the inequality measures, we find strong evidence that greater inequality escalated killings by Maoists. Poverty did not necessarily increase violence. Education moderated the effect of inequality on killing, while predominance of farmers and of Nepali speakers exacerbated it. We find evidence that more killings occurred in populous villages, lending support to the idea that violence was directed at expanding the Maoist franchise by demonstrating that opposition to the monarchy and elites in power was possible to achieve.     

The institutions of economic freedom and entrepreneurship: evidence from panel data

This paper provides new evidence on the determinants of entrepreneurship across countries. The paper investigates the relationship between the institutional setting, in terms of economic freedom, and entrepreneurship, measured by self-employment, in a panel data setting covering 23 OECD countries for the period 1972–2002. The measure of economic freedom includes five aspects: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and the regulation of credit, labour and business. The empirical findings show that a smaller government sector, better legal structure and security of property rights, as well as less regulation of credit, labour and business tend to increase entrepreneurship.     

Social security and private saving: theory and historical evidence

This article is a nontechnical presentation of the debate that has gone on during the past decade over whether the U.S. social security system has depressed private saving in the economy. The heart of the article is an assessment of economist Martin Feldstein's original evidence, presentation of the alternative evidence that concluded that currently available historical data do not support the proposition that social security reduces private saving, and an evaluation of the contradictory evidence presented by Feldstein in response to the alternative evidence. The article concludes that, although the total body of evidence is inconclusive, the historical evidence fails to support the hypothesis that social security has reduced private saving. The Office of Research, Statistics, and International Policy, as part of its ongoing research mission, investigates the interrelationship between social security and the economy. This article presents an examination of one of several aspects of this relationship relevant to public policy considerations and is intended to make previously published technical papers available to a broader audience.     

Institutions and the convergence hypothesis: The cross-national evidence

DeLong and others have shown that cross-country convergence in per capita incomes is limited to samples of currently-industrialized nations, or universal-literacy nations. In particular, income dispersion has failed to decline in groups of ex ante rich nations. This study finds strong convergence in per capita incomes among nations with institutions (namely secure property rights) conducive to saving, investing, and producing. Incomes are shown to converge even within ex ante rich samples when measures of institutional quality are held constant.     

Social divisions and institutions: assessing institutional parameter variation

This paper investigates the hypothesis that the association between property rights institutions and income is weaker in countries with high social divisions. It argues that social divisions should have a negative effect on perceived institutional inclusiveness, which in turn should depress institutional payoffs. Absent a property rights indicator that captures the perceived inclusiveness of institutions, social divisions should then weaken the observed association between property rights institutions and income. The empirical results support this hypothesis, and highlight the importance of evaluating whether the institutions measure used captures the institutional framework applying to the population at large.     

The political feasibility of full ownership property rights: The cases of pollution and fisheries

The present paper investigates the political feasibility of policies to control pollution and fishing. It first hypothesizes the following: when common or usufruct property rights are changed to full ownership, the new policy is not an unadulterated charge or auctioned license because of the implied wealth transfer. This hypothesis is “tested” by reviewing the cases in which full ownership rights have been established and is found to be consistent with the evidence. The paper then investigates the conditions that facilitate the development of full ownership rights. It concludes that proposing policies that are simple and incremental increases political feasibility, in large part because of greater understanding by fishermen and polluters.     

Does social trust determine the size of the welfare state? Evidence using historical identification

Most modern welfare states offer an extensive array of services and benefits that are wholly or partly financed by tax revenue. One missing link in explaining the long-run sustainability of such comprehensive welfare states could be the already-existing stock of trust. Indeed, our cross-country results suggest that trust determines the size of welfare states as well as three features that are arguably necessary for their preservation: high levels of political confidence, strong legal institutions protecting private property rights, and low levels of bureaucratic corruption.     

Why not Africa? – Growth and Welfare Effects of Secure Property Rights

This paper presents the long-run equilibrium and developmentdynamics in the neoclassical growth model and a simple modelof endogenous growth when property rights are absent. Theresults are compared to the outcome in a corresponding modelwith secure property rights. The main findings are that thereexists a considerable gain in level and growth of consumptionfrom establishing secure property rights, that economicperformance without property rights worsens with an increasingnumber of competing social groups, and that the existence orabsence of property rights explains conditional convergence.     

Post-capitalist property

When writing about property and property rights in his imagined post-capitalist society of the future, Marx seemed to envisage ‘individual property’ co-existing with ‘socialized property’ in the means of production. As the social and political consequences of faltering growth and increasing inequality, debt and insecurity gradually manifest themselves, and with automation and artificial intelligence lurking in the wings, the future of capitalism, at least in its current form, looks increasingly uncertain. With this, the question of what property and property rights might look like in the future, in a potentially post-capitalist society, is becoming ever more pertinent. Is the choice simply between private property and markets, and public (state-owned) property and planning? Or can individual and social property in the (same) means of production co-exist, as Marx suggested? This paper explores ways in which they might, through an examination of the Chinese household responsibility system (HRS) and the ‘fuzzy’ and seemingly confusing regime of land ownership that it instituted. It examines the HRS against the backdrop of Marx’s ideas about property and subsequent (post-Marx) theorizing about the legal nature of property in which property has come widely to be conceptualized not as a single, unitary ‘ownership’ right to a thing (or, indeed, as the thing itself) but as a ‘bundle of rights’. The bundle-of-rights idea of property, it suggests, enables us to see not only that ‘individual’ and ‘socialized’ property’ in the (same) means of production might indeed co-exist, but that the range of institutional possibility is far greater than that between capitalism and socialism/communism as traditionally conceived.     

Lobbying, corruption and political influence

The paper explores the determinants of generalized trust across countries. The findings suggest that only few variables can be considered significant. Social polarization in the form of income inequality and ethnic diversity reduces trust, Protestantism and having a monarchy increases trust while post-communist societies are less trusting than other. The findings also provide support for the use of a standard indicator as a stable measure of generalized trust and emphasize the importance of taking endogeneity seriously.     

Competing Concerns: Balancing Human Rights and National Security in US Economic Aid Allocation

This paper theorizes that the effect of human rights violations on US economic aid is conditioned by the salience of US national security concerns. National security concerns will be more salient in situations where recipients contribute to maintaining US security and in temporal eras when the USA is perceived as being under increased external threat. As the relational and temporal salience of national security increases, any negative effect of human rights violations on US economic aid should decrease. I test this hypothesis by examining US economic aid allocations to states from 1977 to 2005. The results show that the salience of national security concerns present in the US-recipient relationship does condition the relationship between human rights violations and US economic aid. There are also significant differences between different temporal eras of US foreign aid allocation. Future work should address how conflicts between interests and values in US foreign policy are negotiated.     

The challenges of fractionalized property rights in public‐private hybrid organizations: The good,the bad,and the ugly

Policy designers seeking to harness profit‐driven efficiency for public purposes are increasingly creating organizations with fractionalized property rights that distribute “ownership” among public and private actors. The resulting hybrids are quite diverse, including mixed enterprises, public‐private partnerships, social entrepreneurship organizations, government‐sponsored enterprises, and various other hybrid forms. Marrying public purposes to private sector efficiency and strategic flexibility provides a tempting rationale for mixing public and private owners in hybrid organizations. Because public‐private hybrids involve fractionalized property rights, however, they exhibit tension among owners over both strategy and, more importantly, goals. To understand public‐private hybrids, we assess them in terms of six dimensions of property rights: fragmentation of ownership, clarity of allocation, cost of alienation, security from trespass, credibility of persistence, and autonomy (of both owners and managers). The unclear allocation of fractionalized ownership rights facilitates the appropriation of financial residuals and asset ownership opportunistically. Other weaknesses in the property rights configurations of public‐private hybrids create managerial dissonance or opportunistic behavior that typically leads to a narrowing of goals, but sometimes also to organizational failure.     

Rights,review, and spending: Policy outcomes with judicially enforceable rights

Abstract. This paper posits that countries with a constitutional right to social security that can be enforced by courts via judicial review will show patterns of spending on social security that are distinct from countries with other constitutional and judicial arrangements. Governments in countries with enforceable rights will be constrained to spend more on transfer programs to avoid censure from the courts. The hypotheses are tested using data from 22 OECD countries using time–series cross–section analysis. The results show that enforceable rights are associated with higher growth rates in social security spending and lower fluctuation in expenditures on social programs, although the amount of GDP spent on social transfers is unaffected by rights. These results are consistent with the idea that governments' spending habits are constrained by positive rights, but rebut the argument that rights lead to economic distortions.     

Does intellectual property lead to economic growth? Insights from a novel IP dataset

While policymakers often make bold claims as to the positive impact of intellectual property (IP) rights on both developed and developing country economies, the empirical literature is more ambiguous. IP rights have both incentive and inhibitory effects that are difficult to isolate in the abstract and are dependent on economic context. To unravel these contradictory effects, this article introduces an index that evaluates the strength of IP protection in 124 developing countries for the years 1995 to 2011. We illustrate the value of this index to economics study and show evidence that is consistent with IP leading to increased growth. Our results are further consistent with two causal pathways highlighted in the literature: that IP leads to greater levels of technology transfer and increased domestic inventive activity. Yet other aspects of our study fit uneasily with this simple story. For example, we find evidence suggesting that increased levels of growth lead to greater levels of IP protection, contradictory evidence in the literature linking IP with growth, a lack of evidence that increased levels of IP protection lead to actual use of the IP system, and problems with what IP indexes measure. Because of this, we suggest another – and so far undertheorized – explanation of the links between IP and growth: that IP may have few direct effects on growth and that any causality is a result of belief rather than actual deployment of IP.     

Does economic inequality undermine political equality? Testing two common assumptions

In recent years, scholars have expressed concern that democratic political systems are more responsive to rich citizens than to poor citizens under conditions of economic inequality. However, it is unclear whether economic inequality leads to unequal influence on government. Moreover, despite claims that proportional representation reduces inequalities in representation, there is no evidence that it does. I test these two prominent claims by connecting two types of citizens’ preferences to the composition of government in non-presidential systems using the Comparative Study of Electoral Systems (CSES) dataset. I find that rich citizens gain better representation in government than the poor more often than the reverse. However, I find no evidence of an association between economic inequality and inequalities in representation or that proportional representation influences income gaps in representation.     

Women's rights in democratic transitions: A global sequence analysis, 1900–2012

What determines countries’ successful transition to democracy? This article explores the impact of granting civil rights in authoritarian regimes and especially the gendered aspect of this process. It argues that both men's and women's liberal rights are essential conditions for democratisation to take place: providing both women and men rights reduces an inequality that affects half of the population, thus increasing the costs of repression and enabling the formation of women's organising – historically important to spark protests in initial phases of democratisation. This argument is tested empirically using data that cover 173 countries over the years 1900–2012 and contain more nuanced measures than commonly used. Through novel sequence analysis methods, the results suggest that in order to gain electoral democracy a country first needs to furnish civil liberties to both women and men.     

Social Citizenship in China: Continuity and Change

A fundamental feature of Chinese social citizenship is the demarcation between the rural population and the urban population. Entitlement to income security and welfare provision has been exclusively a right of city dwellers. However, as economic reform progresses, the socialist welfare system has become unable to provide adequate protection. Welfare reform intends to widen the social security net, yet it has inadvertently exacerbated social inequality. In the meantime, the inferior social position of the peasantry has worsened as an effect of continued state bias, heightened tax and fee burdens, and the expropriation of farmland for development. In light of the intrusion on their rights and interests, more and more Chinese citizens have taken to protesting to voice their discontent.     

Government allocation of property rights: Who gets what?

It is widely believed that regulatory programs that confer property rights in the United States represent a device for transferring income from those with less political power to those with more. An analysis of twelve regulatory programs that confer such rights shows that programs do define and allocate property rights according to clearly visible rules; but the rules work to support the economic status quo. To satisfy this paramount political objective, policymakers may sacrifice efficiency. But there is no evidence that they intend these programs to shift wealth from a weaker to a stronger group.