The political determinants of fiscal policies in the states of India: An empirical investigation

Using data from the 14 major states of India, we investigate whether state governments' fiscal policy choices are tempered by political considerations. Our principal findings are twofold. First, we show that certain fiscal policies experience electoral cycles: state governments raise less commodity tax revenue, spend less on the current account, and incur larger capital account developmental expenditures in election years than in all other years. Second, we show that coalition state governments raise less own non-tax revenues and spend less on the current account than state governments that are more cohesive in composition. In sum, the dispersion of political power affects government size.     

The political economy of development: An empirical analysis of the effects of the institutional framework on economic development

Researchers suggest that societies characterized by high levels of political freedom are expected to exhibit significantly higher rates of economic growth than those in which civil liberties and political rights are abridged. In the present study, four sets of national-level data and panel regression analysis are used to examine the relationship between the institutional framework and various measures of economic development. While the results from the full sample support the hypothesis that political freedom enhances economic development, the results obtained from the disaggregated models cast doubts on this conclusion. An important lesson to be learned from the present study is that there is yet no single empirical model of economic development that can be applied to all societies. John Mukum Mbaku, PhD, is professor in the department of economics at Weber State University. He received the Ph.D. degree in economics from the University of Georgia in 1985. His research interests are in public choice, economic development, property rights, and Africa. He has published articles in such journals asPublic Choice, Cato Journal, Applied Economics (UK),Konjunkturpolitik (Germany),International Review of Economics and Business (Italy),Indian Journal of Social Science, Asian and African Studies, Journal of Economic Development, The Review of Black Political Economy. He is associate editor (Africa) ofJournal of Third World Studies. Recent publications include Markets and the economic origins of apartheid in South Africa,Indian Journal of Social Science, vol. 6, no. 2 (1993); Foreign aid and economic growth in Cameroon,Applied Economics (UK), vol. 25, no. 10 (1993); Rent seeking and institutional stability in developing countries, (with Mwangi S. Kimenyi),Public Choice, vol. 77, no. 2 (1993); and Institutional instability and economic growth in sub-Saharan Africa,International Review of Economics and Business (Italy), vol. 40, no. 9 (1993). He is currently researching the determinants of institutional instability in Africa.     

Effectiveness of selective credit controls: An empirical test applied to India

This article examines the efficiency of the selective credit policies pursued by the Indian authorities aimed at curtailing inventory accumulation in the sugar industry. Based on the relationship between investment demand and credit availability, a methodology is developed to test the degree of substitutability of different types of credit in the inventory decision of the firm. The tests conducted indicate that the credit policies adopted by Indian authorities have been of limited effectiveness owing to the substitutability of the different sources of finance. The results also indicate that while a correctly designed selective credit policy can affect inventory accumulation, the same policy may have an adverse impact on overall investment of the firm.     

The effects of fiscal decentralisation on the strength of political budget cycles in local expenditure

In this article we analyse the effects of political business cycles and fiscal decentralisation on the expenditure categories of Polish municipalities. We find convincing evidence demonstrating the impact of strong political business cycles in almost all expenditure categories, particularly for the categories of expenditure relevant to electoral success, such as infrastructure and social programmes. We find evidence that transfers to municipalities increase the strength of the electoral cycle.     

Dominance and change in the global computer industry: Military, bureaucratic, and network state developmentalisms

This article examines the conditions under which firms in different economies were able to emerge as significant actors in the global computer industry during different time periods. To achieve this, the article divides into three periods the history of the industry in terms of the three major policy regimes that have supported the dominant firms and regions. It argues that these policy regimes can be thought of as state developmentalisms that take significantly different forms across the history of the industry. U.S. firms’ dominance over their European counterparts in the 1950s and 1960s was underpinned by a system of “military developmentalism” where military agencies funded research, provided a market and developed infrastructure, but also demanded high quality products. The “Asian Tigers”—Taiwan, Singapore, Hong Kong, and South Korea—in the 1970s and 1980s were able to eclipse their Latin American and Indian rivals due in large part to the significant advantages offered by a highly effective system of “bureaucratic developmentalism,” where bureaucratic elites in key state agencies and leading business groups negotiated supports for export performance. The 1990s saw the emergence of a system of “network developmentalism” where countries such as Ireland and Israel were able to emerge as new nodes in the computer industry by careful economic and political negotiation of relations to the United States, reestablished at the center of the industry, and by more decentralized forms of provision of state support for high-tech development. Finally, the conditions under which new regimes can emerge are a consequence of the unanticipated global consequences of previous regimes. While state developmentalisms have been shaped by existing global regimes, they have promoted further and different rounds of industry globalization. Seán ó Riain is professor of sociology at the National University of Ireland, Maynooth. His research has been primarily on the political economy of high-tech growth in Ireland and elsewhere, and on work and class politics among software developers. He is the author ofThe Politics of High Tech Growth: Developmental Network, States in the Global Economy (Cambridge, 2004).     

The myth of equilibrium: winner power, fiscal crisis and Russian economic reform

It has become common to describe Russia as a state that has only achieved partial reform due to the influence of powerful economic forces, the ‘winners’ of economic reform, and to assume that the Russian state lacks autonomy. This paper questions how far reform in Russia has been compromised by the power of winners. The failure of economic reform between 1992 and 1998 is explained as a policy response by state officials unable to manage tendencies towards fiscal crisis because of the state's general helplessness in managing the Russian economy, rather than as a surrender of sovereignty to economic interests.     

Transition strategy,corporate exploitation,and state capture: An empirical analysis of the former Soviet states

It is difficult to find, at a glance, a clear connection between corruption and the reform processes in the states of the former Soviet Union (FSU). The key to untangling this issue is to look at the peculiarities of their transition strategies and economic crisis compared with those of Central and East European countries. This paper aims to unravel the complex ties between the transition process and corruption in the FSU states through theoretical and empirical analyses of the impact of multiple factors. These factors include the extent of decentralization of the government–enterprise relationship and the degree of state intervention in corporate management as well as the impact of economic distress that have been affecting the frequency and degree of corporate exploitation and state capture. In this manner, our study aims to complement earlier achievements in this field.     

Unanticipated capital flows and the Mexican economy: An empirical investigation

This research explores the differential impact of unanticipated and anticipated foreign capital flows on Mexico's economy for the period 1965–85. If unanticipated flows cause appreciation of the real exchange rate and do not affect domestic expenditure, one can assume that the country's foreign exchange constraint is not binding. Based on empirical evidence, this hypothesis can be rejected. The implication is that Mexico's problems probably do not stem from overborrowing. Anticipated capital flows do affect private spending, but a negative coefficient suggests that the private sector has borne the brunt of post‐crisis adjustment. The results show that the Mexican government has dominated the expenditure of foreign loans throughout the period.     

The economic impact of genetically modified cotton on South African smallholders: Yield,profit and health effects

Results of a large-scale survey of resource-poor smallholder cotton farmers in South Africa over three years conclusively show that adopters of Bt cotton have benefited in terms of higher yields, lower pesticide use, less labour for pesticide application and substantially higher gross margins per hectare. These benefits were clearly related to the technology, and not to preferential adoption by farmers who were already highly efficient. The smallest producers are shown to have benefited from adoption of the Bt variety as much as, if not more than, larger producers. Moreover, evidence from hospital records suggests a link between declining pesticide poisonings and adoption of the Bt variety.     

The effect of fiscal transparency on corruption: A panel cross-country analysis

Both academicians and practitioners have advocated for increased fiscal transparency in government as a means of promoting budget discipline, improving functioning of the public sector, fostering greater accountability, and fighting the global menace of corruption. Despite worldwide calls for greater disclosure, empirical analyses of whether and how fiscal transparency actually affects governance outcomes are still limited. This study draws on public choice and principal–agent theories to demonstrate how public disclosure of budgetary information helps deter government corruption. The data from 95 countries over the period 2006–14 provide evidence that more fiscally transparent countries are perceived as less corrupt. We also find that fiscal transparency matters most at the final stages of the budget process when information disclosure reflects actual government spending. Data also confirm that a Citizens Budget can serve as a strong anti-corruption tool.     

The effects of market concentration on costs of local public services: empirical evidence from Dutch waste collection

ABSTRACT

Different concentration indexes are calculated for the Dutch waste collection market and all show that this market was highly concentrated in 2002, 2006, 2010 and 2014. The estimation results in 2002 show that private collection is cheaper but high concentration increases costs of private collection and therefore (partly) offsets the advantage of contracting out. In 2006, the savings gained from privatisation and also the effect of concentration disappear, probably due to the introduction of a VAT-compensation fund. In 2010, for an area with a radius of 30 km, high concentration increases costs, but for larger areas, this effect mostly disappears. For 2014, in most estimations, this concentration effect disappears. If we include fixed effects for a panel, the cost advantage of inter-municipal cooperation is larger than that of private production and concentration effects also disappear. Overall, these estimation results are rather independent of the concentration indexes used, if we investigate several indexes as an alternative for the Herfindahl–Hirschman index.     

Presidents and cabinets: The political determinants of fiscal behavior in Latin America

What political factors drive fiscal behavior in Latin America’s persidential democracies? This work seeks to identify the political determinants of the level of public spending and the primary balance of ten democratic regimes in Latin America between 1980 and 1998. We consider, besides the influence of traditional variables such as the government’s ideological orientation and electoral cycle, the impact of other institutional and political aspects, such as the legislative strength of the president, ministerial stability, and the degree of centralization of budget institutions. Methodologically, the work is based on a pooled cross-section-time-series data analysis of 132 observations. Our main findings are that presidents supported by a strong party and leading a stable team of ministers—and ones more to the right on the political spectrum—had a negative impact on public spending and a positive effect on fiscal balance, and that the electoral cycle deteriorates the latter.     

The annulled Tax state: Schumpeterian Prolegomena to the study of postcommunist fiscal sociology

How was a new infrastructure of revenue-collection instituted after the collapse of Soviet-type regimes in Eastern Europe? This article suggests that currently available answers to this question are unsatisfactory. Building upon insights derived from the literature on fiscal sociology and from Joseph Schumpeter’s analysis of modern “tax states,” it outlines a new approach to the study of various phenomena related to revenue-collection in postcommunism. More specifically, I examine a set of empirical and theoretical issues related to the reemergence of a taxpayer as having a cultural role, the reconfiguration of the bureaucratic apparatuses bequeathed by the old regime, and the recreation of trustworthy national currencies. Having identified important gaps in our understanding of the transformative processes that engulfed the region after 1989, the paper introduces a more comprehensive research program focused on the context-specific challenges inherent in the attempt to re-establish tax states in the formerly communist countries.     

The impact of tax structures on deficits: tax elasticity and fiscal illusion in sixteen oecd countries

This paper represents the first systematic attempt to link revenue structure to deficits cross-nationally. Recent analyses of the causes of increased budget deficits in the industrialized countries have focused on the factors that influence government spending, ignoring the possibility that chronic deficits might also be caused by shortfalls in revenue. In this research, using data from sixteen OECD countries during the period 1959-1990, we test hypotheses regarding the linkage between a country's revenue structure and its experience with deficits. We find evidence that countries heavily dependent on direct taxes had more difficulty keeping spending and revenues in line, particularly during times of high unemployment. We find no evidence, however, of a “fiscal illusion” impact on deficits.     

The effects of family planning effort and development on fertility: An intervening variables framework

To pinpoint the intervening variable that transmit the impacts of development and family planning effort on fertility, a modified proximate determinants model was applied to data from 59 developing countries. The intermediate variable included level of exposure to sexual intercourse (the percentage of women 20-24 years old in a union), deliberate marital fertility control (the percentage of married women of reproductive age who were using contraception), and natural marital fertility (operationalized as average per capita calorie consumption). The regression equations indicated that both social development and family planning effort can influence fertility levels substantially through their association with higher levels of contraceptive use. Interestingly, the direct effects of family planning and social development on the crude birth rate became insignificant when the intermediate variables were included in the same equation. Path analysis revealed that social development has an indirect effect of -0.083 via its influence on marriage patterns and of -0.316 due to its effect on contraceptive usage. Family planning has a lesser indirect impact on fertility (-0.487), and -0.111 of this effect reflects program effort's dependence on the level of social development. Economic development is positively linked to fertility, and future research should assess whether this factor is partially counterbalancing the fertility-reducing impact of social development and family planning programs. Although this analysis confirms that delayed marriage and widespread adoption of contraception are key intervening variables, they cannot influence fertility in societies where there are social or cultural impediments to such changes.     

The evolution of Russian federalism and its current fiscal dilemmas: an institutional account

In order to make sense of the fiscal component of the emergent federalism in the post-Soviet Russian political system, this article provides an historical-institutional analysis which charts over time the development both of legal frameworks and informal political contexts, thus providing an overview of the changing mix of constraints, resources, and strategic opportunities present to actors occupying various roles within the federal system. Several discrete stages in the evolution of Russian federalism from the late Gorbachev era to the present are identified. According to this analysis, Russia's political system has elements of genuine federalism, but federalization is constrained by specific attributes of the Soviet legacy. Russian federalism is asymmetrical, that is, ethnically defined subunits (the republics) enjoy greater powers than their non-ethnically defined counterparts. This asymmetry may have been a necessary response to the ethnic ambitions of the so- called “autonomous” entities inherited from the Soviet era. At the same time, however, some of the non-ethnic subunits (principally the oblasts, or regions) have demanded similar rights of autonomy, especially with regard to control of natural resources, shared tax revenues, and other economic concerns. Developments since the mid-1990s suggest a modest return of power to the federal center at the expense of the subunits, but the latter still enjoy a degree of independence unheard of during the Soviet period. Meanwhile, there has been a trend toward equalization of economic powers between the republics and oblasts. Still worrisome, however, are the disparities in wealth among the various subunits and the penchant for self-enrichment on the part of leaders of otherwise impoverished regions and republics.