Groups,Growth and Trust: Cross-Country Evidence on the Olson and Putnam Hypotheses

Olson (1982) and Putnam (1993) providesharply conflicting perspectives on theimpact of private associations on economicwell-being and social conflict. Olson(1982) emphasized their propensity to actas special interest groups that lobby forpreferential policies, imposingdisproportionate costs on the rest ofsociety. Putnam (1993) viewed membershipsin horizontal associations as a source ofgeneralized trust and social ties conduciveto governmental efficiency and economicperformance. Using cross-country data,this paper investigates the impact ofassociational memberships on generalizedtrust and economic performance, findinglittle support for Olson's view of theimpact of groups, and only mixed supportfor the Putnam perspective.     

'Appropriate' Policy Knowledge, and Institutional and Governance Implications

The papers in this special section of AJPA are the product of a symposium held in Brisbane in February 2003, which was jointly sponsored by the School of Political Science and International Studies at the University of Queensland and the Queensland Department of Premier and Cabinet. Three papers were delivered. David Adams, from the Victorian Public Service, delivered a paper entitled 'Usable knowledge and public policy'. Wayne Parsons, from the University of London, gave a paper 'Not just steering but weaving: Relevant knowledge and the craft of building policy capacity'. Randal Stewart, a policy consultant based in Sydney, gave a paper entitled 'Public sector reform knowledge production'. The purposes of this paper are to highlight salient points from the papers and to assess briefly the institutional and governance implications of taking at last some steps beyond the currently prevailing rationalist approaches to policy and governance.     

The alternative vote and interethnic moderation: A reply to Fraenkel and Grofman

The alternative vote (AV) is a preferential electoral system that tends to reward political moderation and compromise. Fraenkel and Grofman have modeled the likely effects of AV in severely divided societies, in order to impugn AV as a tool of interethnic accommodation. In this response, I show that Fraenkel and Grofman’s model is based on extreme assumptions that bear no relation to party and voter behavior in such societies. Models based on realistic assumptions about strategic behavior and cross-national experience with AV both demonstrate that AV generally provides centripetal incentives that can contribute to interethnic coalition-building and accommodation.     

Optimal Central Banker Contracts and Common Agency

This paper considers the contracting approach to centralbanking in a simple common agency model. We suggest thatcentral banker contracts that do not consider the possibilityof more than one principal existing are incomplete contracts.Such incomplete contracts can be a poor form ofmonetary policy delegation under common agency. We develop amodel with two principals – society (government) and ageneric interest group, whose objective conflicts withsociety’s ex ante preferences by incorporating an inflationarybias. We determine when the government-offered orinterest-group-offered contract dominates the central banker’sdecision. The results largely depend on whether theinterest-group-offered contract is written in terms of outputor inflation.     

Tinpots,Totalitarians (and Democrats): An Empirical Investigation of the Effects of Economic Growth on Civil Liberties and Political Rights

Ronald Wintrobe (1990, 1998) has recently provided atheoretical foundation for estimating equations that attemptto explain the dependence of civil liberties and politicalrights in non-democratic regimes on the history of economicgrowth. This theory suggests that data from different kinds ofnon-democratic countries should not be pooled without allowingcoefficients to vary with regime type. It also placesinteresting restrictions on the signs of the coefficients ofeconomic growth in equations explaining freedom in the typesof regimes Wintrobe identifies. In this paper, we employ theserestrictions to test Wintrobe's theory. Some additionalhypotheses about the difference between democratic andnon-democratic regimes and about the role of education, notconsidered by Wintrobe, are also investigated.The results indicate clearly that the relationship between thedegree of freedom – as measured by the sum of the Gastilindexes of civil liberties and political rights – andeconomic growth varies significantly across all types ofregimes. Totalitarians (that attempt to maximize power) areclearly different than tinpots (that just attempt to maintainpower) in this respect, and non-democratic regimes differ fromdemocracies. Other aspects of the theory are partiallyconfirmed. In particular, in totalitarian regimes, positivegrowth reduces freedom, and negative growth increases it insome specifications. The theory predicts the opposite patternfor tinpots, and we do find that negative growth reducesfreedom in tinpot regimes. However, positive growth in tinpotsalso appears to reduce freedom in some cases, which is not inaccord with the theory. Secondary schooling has a positive effect on freedom, as inprevious empirical work, a result that is shown here to holdeven when each type of regime is considered separately. Butthe effect of primary schooling is different: in tinpot andtotalitarian regimes, but not in democracies, primaryschooling is associated with reduced freedom.