Institutions and Caribbean Economic Performance: Insights from Jamaica

We explore the impact of social institutions on economic performance in Jamaica through a reinterpretation of the plantation economic model. In its original form, the plantation model fails to develop a causal link between the plantation legacy and persistent underdevelopment. Despite its marginalization, the model remains useful for discussions on growth and development. Consequently, we offer a reappraisal using the causal insights from Kenneth Sokoloff and Stanley Engerman. We use two examples to demonstrate how inequality encourages the formation of institutions that are inconsistent with growth, and an empirical analysis to confirm the hypothesized relationship between inequality, institutions, and economic development. Since inequality is expected to influence growth indirectly, we use a structural specification, which follows William Easterly’s recent test of Sokoloff and Engerman’s argument. Our reliance on a time-series specification is unique. We demonstrate that the expectation that, on average, inequality and growth is negatively related and that institutions may compromise growth are accurate for Jamaica, the most cited Caribbean nation in the current discourse. Our results carry several policy implications, including support for the recent calls in Jamaica for political restructuring. However, both the paucity of similar studies and the importance of the implications for sustainable growth and development demand further analyses.

Institutions and Development in Latin America: A Comparative Analysis

We review the theoretical literature on the concept of institutions and its relationship to national development, propose a definition of the concept, and advance six hypotheses about institutional adequacy and contributions to national development. We then present results of a comparative empirical study of existing institutions in three Latin American countries and examine their organizational similarities and differences. Employing the qualitative comparative method (QCA) proposed by Ragin, we then test the six hypotheses. Results converge in showing the importance of meritocracy, immunity to corruption, absence of “islands of power,” and proactivity in producing effective institutions. Findings strongly support Peter Evans’ theory of developmental apparatuses.

The International Monetary Fund: A review of the recent evidence

A review of recent quantitative studies on the International Monetary Fund reveals that much of the conventional wisdom is incorrect. Recent studies have demonstrated a new degree of methodological rigor, have drawn more heavily upon insights from political science, and have asked a number of new questions. We review studies of participation in IMF programs, design of IMF conditionality, implementation and enforcement of IMF conditions, conventional program effects and catalytic effects. At every stage, we find substantial evidence of the influence of major IMF shareholders, of the Fund’s own organizational imperatives, and of domestic politics within borrowing countries. We conclude that very little is known with certainty about the effects of IMF lending, but that a great deal has been learned about the mechanics of IMF programs that will have to be taken into account in order to obtain unbiased estimates of those effects.

Research on immigrant earnings

As the first in a trio of pieces devoted to incorporating immigration into policy models, this review of research on immigrant earnings trajectories brings to light several findings. Controlling for demographic and human capital characteristics, immigrants often start their U.S. lives at substantially lower earnings, but experience faster earnings growth than natives with comparable years of education and experience. The extent to which the earnings trajectories of immigrants and natives differ varies by country of origin, with the source-country's level of economic development being a key determinant of the size of the U.S.-born/ foreign-born difference. The earnings profiles of immigrants from economically developed countries such as Japan, Canada, or Western Europe resemble those of U.S. natives who are of the same age and education level. In contrast, the earnings of immigrants from developing nations tend to start well below those of U.S. natives with comparable education levels and experience, but rise more rapidly than their U.S. counterparts. Comparing the earnings profiles of immigrants of similar age, sex, and years of schooling, over time and across groups, a strong inverse relationship emerges between their initial earnings and their subsequent U.S. earnings growth. In other words, the lower (higher) the initial earnings are, the higher (lower) the earnings growth. These and other research results have important implications for the projection of immigrant earnings and emigration in microsimulation models, as discussed in the two articles following this one: (1) "Adding Immigrants to Microsimulation Models" and (2) "Incorporating Immigrant Flows into Microsimulation Models".     

Trending economic factors and the structure of Congress in the growth of government, 1930–2002

We investigate the role of Congress in the growth of federal public expenditure since 1930, building on the work of Kau and Rubin (Public Choice, 113:389–402, 2002). The model incorporates majority party strength and the extent of party control of Congress in addition to the median ideological position of elected representatives. We first provide estimates of the relative importance of the state of Congress and of trending supply and demand-side economic factors in the evolution of federal spending. The resulting models are then used to simulate the consequences of the radical and historically unprecedented shift to the right of Congress in 1994/95.     

That Enlightenment Question Again

Sandall’s complaint that the Enlightenment is in danger is not new as it repeats a long standing complaint about “the betrayal of the intellectuals”. But the danger today is not from either the Muslim world or from the marginalized academics who pursue an anti-liberal multicultural agenda that belittles the Western liberal tradition. In the United States the menace comes from the much more powerful far right that has abandoned America’s Enlightenment tradition. It is time for academics to start teaching students what that tradition is all about, and why it needs to be defended, but spreading fear about weak and divided Muslim societies is not the way.

Debt,democratization, and development in Latin America: How policy can affect global warming

The environmental Kuznets curve (EKC) hypothesis conjectures a nonlinear relationship between pollution and economic growth, such that pollution per capita initially increases as countries economically develop, but then reaches a maximum point before ultimately declining. Much of the EKC literature has focused on testing this basic hypothesis and, in studies that find evidence of an EKC, estimating the “turning point” level of development at which the per capita pollution‐growth relationship changes sign. This approach has not emphasized the policy relevance of specification issues or the potential role of policy variables. This research explores a modified EKC specification which conditions the pollution‐growth relationship on a country's level of debt and degree of democratization. These variables turn out to be significant, implying that different political and economic contexts can shift EKCs and their turning points. These findings suggest that policies to relieve debt burdens and institute political reform, in addition to their usual justifications, also could be used as a strategy to reduce carbon emissions from developing countries. © 2008 by the Association for Public Policy Analysis and Management.