Institutions and economics

Ravi Kanbur, 09 March 2018

Gunnar Myrdal’s “Asian Drama” was published 50 years ago. On the face of it, the book, framed in terms of the realities of an economically stagnant Asia, appears to have little to offer the modern development economist. This column argues, however, that the issues Myrdal raised are fundamental ones not only for development but for our discipline of economics and for the broader terrain of political economy.

Jonathan D. Ostry, Andrew Berg, Siddharth Kothari, 19 February 2018

While there is consensus that structural reforms can increase growth, there is also a fear that certain reforms can exacerbate inequality. This column argues – based on a dataset covering financial, institutional, and real sector reforms – that certain reforms do indeed increase inequality but despite this, the net effect on growth remains positive.

Alex Klein, Sheilagh Ogilvie, 14 January 2018

A famous hypothesis posits that serfdom was caused by factor endowments, specifically high land-labour ratios. Historical evidence seems to refute this idea, but with substantial identification problems. This column uses microdata for more than 11,000 Bohemian villages in the year 1757 to control for other potential influences on serfdom. The results support the factor endowments hypothesis, with higher land-labour ratios intensifying serfdom, suggesting that institutions are partially shaped by economic fundamentals.

Julia Cagé, 23 December 2017

Conventional wisdom holds that more media competition makes citizens more informed, and that it improves the functioning of democracies. This column tests this claim using data on local newspaper circulation in France. It finds that increased media competition leads to business stealing and to a decrease in the coverage of public affairs news by local newspapers. It also has a negative impact on local election turnout. While competition is key to the quality of the media environment, the results highlight that more media competition is not necessarily socially efficient.

Chen Lin, Randall Morck, Bernard Yeung, Xiaofeng Zhao, 22 December 2017

Chinese stocks rose sharply overall on news of President’s Xi’s 2012 policy cracking down on corruption, but non-state-owned enterprises in the country’s least liberalised provinces actually lost value. This column argues that China has taught the world something interesting – that prior market liberalisation makes anticorruption reforms more valuable. Once market forces are activated, bribe-hungry officials no longer grease the wheels but instead become pests and invite eradication.

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