What makes fiscal consolidations last? A survival analysis of budget cuts in Europe (1960–2004)

This article examines the political and economic determinants of the relative duration of fiscal consolidations in Europe. The study focuses on the fifteen Member States that formed the EU between 1960 and 2004, and applies survival analysis techniques to their fiscal data. We find evidence that the probability of ending a period of fiscal consolidation depends on the debt level, the magnitude of the adjustment, the relative contribution of spending cuts, and the degree of cabinet fragmentation. Most importantly we also find that under a stricter definition of fiscal consolidation, political variables, such as coalition size and election year, gain importance with respect to economic variables as predictors of the probability of ending an episode of fiscal consolidation. This relative importance of political variables weakened in the run-up to EMU, probably because countries had to consolidate irrespective of their political constraints.     

Policy and regulatory design for developing countries: a mechanism design and transaction cost approach

The first-generation literature on policy design has made considerable contributions over the last 30 years to our understanding of the process, politics and implications of policy design and instrument choice. This literature, however, has generally treated institutions as a black box and has not developed a coherent set of frameworks, theories and models of how institutions matter to policy design. In this paper, I unpack the black box of institutions using transaction cost and mechanism design to show how regulations can be better designed in developing countries when institutions are weak, unaccountable, corrupted or not credible. Under these conditions, I show that efficient regulatory design has to minimize transaction costs, particularly agency problems, by having incentive compatible (self-enforcing) mechanisms. I conclude with a second-generation research agenda on regulatory design with implications for environmental, food and drug safety, healthcare and financial regulation in developing countries.     

Defense Transformation in Latin America: Will It Transform the Technological Base?

Developing the defense trilemma of choices between autonomy, stability, and global integration, this article analyzes the strategic tension in military acquisition between undertaking technology partnerships versus off-the-shelf purchases of equipment to meet modernization needs in Latin America. The Brazilian case is examined for its lessons in how partnerships can help countries to achieve strategic goals while promoting industrial capacities.     

Armed conflict,land grabs and primitive accumulation in Colombia: micro processes,macro trends and the puzzles in between

Armed conflict is widely believed to disrupt agricultural production and ‘reverse’ development, but it may also involve the violent transformation of rural economies from subsistence to commercial agriculture. The case of Las Pavas, an estate in northern Colombia, provides further evidence that armed conflict created opportunities for violent land grabs and the expansion of commercial agriculture in Colombia. However, aggregate data suggest that primitive accumulation may be only part of the story behind the massive scale of forced displacement and dispossession. A research strategy that accounts for the diversity of subnational contexts, processes and outcomes is needed.     

The dynamics of rural poverty in Latin America

The development and perpetuation of a functional dualism between the subsistence sector and the commodity‐producing sector is an objective outcome of the laws of capital accumulation in the periphery of the world capitalist system. The necessity for this dualism derives from the drive of capitalists to maximise profits and thus maintain low wages. Its possibility arises from social disarticulation whereby labour's income does not participate in expanding the market for the modern sector. Through dualism, surplus value is increased not only by the orthodox means of central economies—principally increasing the productivity of work to reduce necessary labour embodied in wage goods—but, in addition, and dramatically more effectively, by collapsing the price of agricultural labour by an amount equal to the production of use‐values by the worker's family in the subsistence plot. In this way, subsistence agriculture supplies cheap labour to commercial agriculture which, in turn, supplies cheap food to the urban sector where it sustains low wages. Socially disarticulated accumulation and functional dualism between capitalist and precapitalist modes perpetuate primitive accumulation in the modern sector based on surplus extraction from the peasant sector fundamentally via the labour market. This specific form of overexploitation of rural labour implies a particular dynamic in the use of labour and natural resources in subsistence agriculture. The pattern of rural poverty and the subjective contradictions of peripheral capitalism can thus largely be understood by identifying the antagonistic contradictions to which the subsistence economy is subject in adjusting to domination.