Transport infrastructure investment is a cornerstone of growth-promoting strategies around the world. However, investment in new infrastructure is not always conducive to stronger economic performance. This column argues that the lack of positive economic returns may be due to institutional failures mitigating the growth effects of public capital expenditures. In contexts marked by weak and inefficient governments and widespread corruption, different types of road investments yield low or no economic returns.
Riccardo Crescenzi, Marco Di Cataldo, Andrés Rodríguez-Pose, 11 April 2017
Decio Coviello, Andrea Guglielmo, Giancarlo Spagnolo, 07 August 2016
Open competition is regarded as a crucial ‘preventative tool’ that limits government discretion and abuse of power when awarding procurement contracts. However, various studies have identified numerous drawbacks to using open auctions when contracting is imperfect. This column discusses the effects of increased buyer discretion on public procurement in Italy. Increased discretion raises the number of repeated wins by contractors, suggesting long-term relationships between buyers and sellers. Furthermore, productive buyer-seller relationships appear to outnumber corrupt ones.
Silda Nikaj, Joshua J. Miller, John Tauras, 28 July 2016
Progress in adopting smoking bans across the US has been slow, despite a majority of Americans supporting a ban in public places. This column uses aggregate and establishment-level data from Texas to examine the economic effects of smoking bans on bars and restaurants. The results suggest that bars and restaurants are not adversely affected by the adoption of a ban.
Rajiv Kumar, 22 July 2016
Despite Narendra Modi’s successful leadership as chief minister of Gujarat, some question his ability to achieve the same progress at the national level as India’s prime minister. This column analyses Modi’s political background and state- and national-level experience to assess his capacity to navigate India through a politically and economically important time towards its goal of becoming a prosperous economy. It finds that while Modi can lean on his Gujarati experience to some extent, in other aspects he will have to depart from his incremental approach to policymaking in favour of radical changes, particularly in the area of employment maximisation.
Benjamin Faber, Cecile Gaubert, 29 June 2016
Governments around the world continue to fund tourism promotion policies, even while current economic literature debates whether tourism in the long run benefits the economy as a whole. This column uses the empirical context of Mexico to analyse the economic implications of international and domestic tourism, and the underlying mechanisms. It finds that tourism provides long-run economic gains to households, both at the local level and in the aggregate.
Marco Manacorda, Andrea Tesei, 22 May 2016
Digital technologies have been widely used for political activism in recent years, including during the Arab Spring, the Occupy Wall Street movement, and the Indignados movement in Spain. This column reports research showing that the growing use of mobile phones in Africa leads to more political protests during recessions and periods of national crisis. The mobilising potential of digital technologies is more pronounced in autocratic countries and those where the raditional media are under state control, suggesting that this technology may play a key role in fostering political freedom.
Benedicta Marzinotto, Alessandro Turrini, 05 September 2014
The link between public- and private-sector compensation has important implications for the labour market and price competitiveness. This column reports that manufacturing and government wages co-move both in the long and short run, but that the long-run co-movement is much stronger where the government is an important employer. This co-movement tends to break down during fiscal consolidation periods, except in large-government countries. Moreover, manufacturing wages exhibit a stronger co-movement with productivity in countries where government wages are set via collective bargaining.
Martin Halla, Franz Hackl, Gerald Pruckner, 21 February 2009
Why do individuals volunteer? This seemingly personal question is not fully explained by individual characteristics. This column examines the state’s capability to affect individuals' decisions to volunteer. Macroeconomic stability increases volunteering, but higher confidence in government and democratisation reduce participation.