Economic freedom, culture, and growth

How do economic freedom and culture impact economic growth? This paper argues that culture, as measured by the World Values Surveys, and economic institutions associated with economic freedom are both independently important for economic prosperity, but the strength of their impact can be better understood only when both are included in the growth regression. Our results indicate that economic freedom is more important than culture for growth outcomes, suggesting substitutability between the two. We posit that culture is important for growth when economic freedom is absent, diminishing in significance once economic freedom is established.     

Disputes, Democracies, and Dependencies: A Reexamination of the Kantian Peace

Militarized interstate disputes are widely thought to be less likely among democratic countries that have high levels of trade and extensive participation in international organizations. We reexamine this broad finding of the Kantian peace literature in the context of a model that incorporates the high degree of dependency among countries. Based on in-sample statistical tests, as well as out-of-sample, predictive cross-validation, we find that results frequently cited in the literature are plagued by overfitting and cannot be characterized as identifying the underlying structure through which international conflict is influenced by democracy, trade, and international governmental organizations. We conclude that much of the statistical association typically reported in this literature apparently stems from three components: (1) geographical proximity, (2) dependence among militarized interstate disputes with the same initiator or target, and (3) the higher-order dependencies in these dyadic data. Once these are incorporated, covariates associated with the Kantian peace tripod lose most of their statistical power. We do find that higher levels of joint democracy are associated with lower probabilities of militarized interstate dispute involvement. We find that despite high statistical significance and putative substantive importance, none of the variables representing the Kantian tripod is associated with any substantial degree of predictive power.     

The three stages of the anti-incumbency vote: Retrospective economic voting in young and established democracies

Economic prosperity is the best recipe for an incumbent government to be re-elected. However, the financial crisis was significantly more consequential for governing parties in young rather than in established democracies. This article introduces the age of democracy as a contextual explanation which moderates the degree to which citizens vote retrospectively. It shows a curvilinear effect of the age of democracy on retrospective economic voting. In a first stage after the transition to democracy, reform governments suffer from a general anti-incumbency effect, unrelated to economic performance. In a second step, citizens in young democracies relate the legitimacy of democratic actors to their economic performance rather than to procedural rules, and connect economic outcomes closely to incumbent support. As democracies mature, actors profit from a reservoir of legitimacy, and retrospective voting declines. Empirically, these hypotheses are corroborated by data on vote change and economic performance in 59 democracies worldwide, over 25 years.     

Democracy and Economic Growth: A Meta-Analysis

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This article challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. It applies meta-regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth. Using traditional meta-analysis estimators, the bootstrap, and Fixed and Random Effects meta-regression models, it derives several robust conclusions. Taking all the available published evidence together, it concludes that democracy does not have a direct impact on economic growth. However, democracy has robust, significant, and positive indirect effects through higher human capital, lower inflation, lower political instability, and higher levels of economic freedom. Democracies may also be associated with larger governments and less free international trade. There also appear to be country- and region-specific democracy-growth effects. Overall, democracy's net effect on the economy does not seem to be detrimental.     

Preferential trade agreements and power asymmetries: the case of technological protection measures in Australia

Since the 1980s states have sought to harmonise economic standards to aid the flow of goods, services and finance across borders. The founding agreements of the World Trade Organisation (WTO), for example, harmonised standards on services, intellectual property and investment. However, mutlilateral trade negotiations in the WTO have since stalled. In response, the United States (US) has engaged in forum shopping, using preferential trade agreements at the bilateral, regional and multinational level to harmonise international standards. This article argues that through forum shopping the US has been able to export standards that support the commercial interests of US-based industries more than they encourage economic exchange across borders. Furthermore, because power asymmetries are starker in preferential trade negotiations smaller and middle power states should not enter trade agreements, which include regulatory harmonisation. This is illustrated with the case of the US-Australia free trade agreement, looking specifically at a copyright standard known as technological protection measures (TPMs). It was clear before, during and after the agreement was signed that Australia’s existing standard on TPMs was more popular than the US-style standard. Nevertheless, a US-style standard is in effect domestically because of the trade agreement.     

Globalization and the Strengthening of Democracy in the Developing World

Scholars and policy makers have long assumed that trade and financial liberalization encourages developing countries to become more democratic; yet no one has developed formal hypotheses about the causal relationship between globalization and democracy. This article shows that these two trends are indeed related, but not necessarily in the direct manner that has commonly been postulated. Combining theories of embedded liberalism and conflict-based theories of democracy, the model presented here depicts the process that affects decisions to strengthen democracy as trade and capital flows increase. I argue that increasing exposure to international export and financial markets leads to improvements in democracy if safety nets are used simultaneously as a strategy for providing stability and building political support. Empirical evidence is provided by econometric analysis covering 59 developing countries for the time period 1972–97.     

Economic shocks and democratic consolidation: Historical evidence from party-level electoral volatility in France

The emergence of a stable party system is a central aspect of democratic consolidation. Building a novel historical dataset, we analyze how economic growth affected the party-level electoral volatility during the consolidation of the French democracy over the Third Republic (1870-1940). We document an asymmetric effect in that positive economic shocks produced electoral stability, while negative shocks had not the expected destabilizing effect. Moreover, a positive shock had a disproportionally stabilizing effect during economic prosperity, four times stronger than during an average economic conjuncture. As France experienced strong positive shocks over this period, our results imply that the party system consolidation may have been driven by a few exceptionally high growth episodes. We also find evidence suggesting that positive shocks developed voters’ support for institutionally stable parties.     

Free Speech,Political Equality,and Campaign Finance Reform: A Paradox for Democracy?

Liberty to speak free of government interference and political equality are both essential to democracy. Yet political equality requires governmental regulation of resources needed for political speech. Analysis of Supreme Court cases, supplemented by considerations from democratic theory, suggest that this apparent paradox is better understood as a tension within the idea of free speech itself: between liberty to speak and the need for government to oversee fair distribution of resources necessary for politically effective speech. Although it is a tension worth negotiating with care, democracy simply requires fairness in distribution of politically relevant resources. The Supreme Court has erred in not reading the Constitution as mandating political equality as a fundamental right, and also in not incorporating real political equality as a compelling state interest. Therefore, the public should seek a 28th Amendment that would mandate political equality regardless of economic circumstance as a fundamental right, and inscribe into the document, for the first time, the word “democracy.”     

Ethics and Foreign Policy: the Antinomies of New Labour's 'Third Way' in Sub-Saharan Africa

This article explores how New Labour has attempted to implement its ideas about a 'third way' foreign policy in sub-Saharan Africa. Through an examination of British foreign policy practices, we explore whether New Labour has succeeded in finding a 'third way' between traditional views of socialism and capitalism in Africa. In particular, the article focuses on New Labour's attempts to build peace, prosperity and democracy on the African continent. We conclude that although New Labour's claims to add an 'ethical dimension' to foreign policy have succeeded in giving Britain a higher profile in the international arena, the implementation of such a policy is intrinsically difficult. These difficulties in turn arise from the antinomies embodied in New Labour's policy, or more specifically from the tension between the liberal internationalism of the third way and traditional concerns for the national interest, as well as the contradictions inherent in a commitment to both political and economic liberalism.     

Hobbes on Democracy

Hobbes is often cited as a precursor of modern liberalism, both on the grounds of his individualism and of his endorsement of intellectual and moral autonomy. Yet Hobbes supports absolutist government rather than democracy. This is partly explained by his rejection of autonomy understood as self-government. But Hobbes's case against democracy is more comprehensive than this. This article considers Hobbes's case against democracy.     

Economic inequality,winner-loser gap,and satisfaction with democracy

This study analyzes how economic inequality affects electoral winners and losers' satisfaction with democracy. We posit that both the poor and the rich have more at stake in elections when inequality is high. Electoral losers, whether they are the poor or the rich, are more likely to be dissatisfied with democratic systems when facing greater disparity in wealth. In contrast, electoral winners confronting higher inequality are more likely to express satisfaction with democracy. Employing a multilevel analysis of Comparative Study Electoral Systems (CSES) data, we find that the gap in satisfaction with democracy between electoral winners and losers widens as income inequality increases. Broadening the conventional wisdom that electoral systems mediate the effect of citizens' winner-loser status on their democratic attitudes, we demonstrate that the mediating effects of economic inequality are more critical than the institutional effects.     

Building Regions on Economic Success: Prosperity and Regionalism in Rogaland

This article presents a political economy perspective on the growth of regionalism in Rogaland, where ever more political issues have been viewed through a regional lens over the last fifteen years. Rogaland has also experienced an economic boom since the 1970s, when it became the hub of Norway's oil adventures in the North Sea. The question is whether these developments are connected, and more specifically, whether the newfound economic prosperity can explain the growth of regionalism. After discussing the main political economy theories of regionalism, the capacity of each theory in explaining the developments in the case at hand is assessed. In particular, the article presents the theoretical argument behind the idea that economic prosperity could lead to regionalism, referring to cases such as Catalonia, Slovenia and Northern Italy. The growth of regionalism in Rogaland is demonstrated by a quantitative content analysis study, which shows that the growth in regionalism corresponds closely to the economic growth over the period 1960–2000. This leads to the conclusion that economic prosperity is the best explanation for the developments in Rogaland. The article then goes on to show specifically how the region's economic prosperity has been applied by political elites in the creation of a regionalist discourse, with examples of how regional elites have been using the region's prosperity in discussions over infrastructure investments, government representation and regional government.     

Political regime change, economic liberalization and?growth accelerations

We examine whether the type of political regime, regime changes, and economic liberalization are related to economic growth accelerations. Our results show that growth accelerations are preceded by economic liberalizations. We also find that growth accelerations are less likely to happen the longer a political regime??be it a democracy or an autocracy??has been in place, while (a move toward) more democracy according to the Polity IV dataset reduces the likelihood of growth accelerations.     

Economic Crisis and Support for Democracy in Europe

The study of the impact of the economic crisis on attitudes toward democracy tends to be focused on satisfaction with specific democratic institutions. This article expands upon previous research to explore how the current economic crisis can affect core support for democracy as a regime. Based on European Social Survey data for the Eurozone countries, the findings are twofold. It is shown, firstly, that perceptions of the state of the economy have an impact both on satisfaction with and support for democracy, and, secondly, that citizens’ support for democracy is greater in bailed-out countries. In countries that have experienced intervention, the more critical citizens and those less satisfied with the outputs of democracy are the stronger advocates of democracy. The article argues that this is connected with the tendency of critical citizens in bailed-out countries to blame external agents for the economic situation while increasing the saliency of democratic rules as a reaction to the imposition of unpopular measures.     

Economic Inequality and Intolerance: Attitudes toward Homosexuality in 35 Democracies

Using hierarchical linear models fitted to data from the World Values Survey and national statistics for 35 countries, this article builds on the postmaterialist thesis by assessing the impact of economic inequality across and within nations on attitudes toward homosexuality. It provides evidence that tolerance tends to decline as national income inequality rises. For professionals and managers, the results also support the postmaterialist argument that economic development leads to more tolerant attitudes. On the other hand, attitudes of the working class are generally less tolerant, and contrary to expectations of the postmaterialist thesis, are seemingly unaffected by economic development. In other words, economic development influences attitudes only for those who benefit most. These findings have political implications, suggesting that state policies that have the goal of economic growth but fail to consider economic inequality may contribute to intolerant social and political values, an attribute widely considered detrimental for the health of democracy.     

Industrial and economic democracy in Sweden: from consensus to confrontation

Abstract. At the beginning of the 1970s, there was a wide-spread political consensus in Sweden that something had to be done in order to increase employee influence in companies and counteract the concentration of private capital. A series of laws on industrial democracy were passed by Parliament, virtually without opposition. The reforms were followed in 1975–1976 by a push towards economic democracy in the form of so-called wage earners' funds. The trade union movement was the leading actor behind these proposals. This broader issue was much more controversial and soon became the focus of sharp disagreement between the parties and the dominant interest organizations. The article analyses the development from consensus to confrontation in industrial and economic democracy in Sweden. Special attention is given to the Public Commission on Wage Earners' Funds, which sat between 1975–1981 without being able to produce any constructive or concrete results.     

Between bilateralism and regionalism in East Asia: the ASEAN–Japan Comprehensive Economic Partnership

Abstract

This paper examines economic regionalism in East Asia with a focus on the key issues in harmonizing bilateral free trade agreements. The ASEAN+1 free trade agreements with China, South Korea and Japan represent the first attempts to structure cooperation in trade across Southeast and Northeast Asia. It is therefore important to examine the coverage of these agreements and the extent to which they actually liberalize trade. This study focuses on major choices made in the negotiation of the ASEAN–Japan Comprehensive Economic Partnership Agreement and the ways in which these choices help or hinder the consolidation of economic regionalism. The results achieved in the ASEAN–Japan Comprehensive Economic Partnership Agreement are limited at best. The agreement does establish some new areas of cooperation among the signatories but fails to address important issues for regionalism such as labor mobility. It also makes limited progress in harmonizing and liberalizing rules of origin. The ASEAN–Japan Comprehensive Economic Partnership Agreement applies product-specific rules to fewer categories of goods than most of Japan's bilateral agreements with ASEAN members but those rules in place are still very restrictive. Moreover, the parties to the ASEAN–Japan Comprehensive Economic Partnership Agreement have the option of applying the rules of their bilateral agreement if it provides more favorable treatment. Thus, there is no guarantee the more liberal terms of the ASEAN–Japan Comprehensive Economic Partnership Agreement will be applied.     

Economic Democracy: The Left's Big Idea for the Twenty-First Century?

While the notion that parts of the economy should be subject to democratic oversight is not particularly new, it is only recently that the term “economic democracy” has begun to emerge as a political label and a political project in its own right. Interest in economic democracy is at a historical high as more and more people search for a comprehensive alternative to neoliberal capitalism that is neither state socialism nor social democracy. In addition, the fact that mainstream concern with economic inequality is at a historical peak means that economic arrangements are on the political agenda in a way that they have not been for many years. The central argument of this article is that economic democracy has the potential to be the “big idea” of the left this century for two main reasons. First, although economic democracy is usually thought to be concerned solely with workplaces, in fact it has implications far beyond this. Indeed, economic democracy is best understood as a comprehensive critique of the economy and a corresponding encompassing vision of an alternative. This article thus aims to offer a sympathetic overview of the main facets of economic democracy—the attempt to democratize workplaces, finance, investment, and the market system—as a holistic and integrative project. Second, economic democracy offers an important method for challenging inequality. The expansion of democratic accountability through representation, and particularly the expansion of opportunity for direct participation in economic decision-making is a fundamentally important method of redressing the structural inequality that continues to be a defining dilemma of our societies.     

Democracy,Economic Wealth and Social Capital: Sorting Out the Causal Connections

There is widespread agreement that democracy, economic wealth and culture are causally linked, but there is sharp disagreement about the degree to which each of the factors influences the others. We contend that a society's culture, in the form of social capital, remains largely unchanged for long periods of time and that it leaves an indelible mark on the society's politics and economics. Using the 1990 World Values Surveys (WVS), we develop national-level social capital scores for the populations of 11 countries. We also use the cumulative General Social Surveys (GSS) to develop social capital scores for Americans who claim to have ancestral ties to these 11 nations. The WVS and GSS scores are strongly correlated, suggesting that social capital is durable and portable. Moreover, the GSS scores, which serve, in effect, as instrumental measures of 19th-century social capital, prove to be better predictors of contemporary politics and economics in the 11 WVS nations than commonly used 19th-century measures of politics and economics.