Cédric Chambru, Emeric Henry, Benjamin Marx, 11 February 2022

One of the most remarkable achievements of the French Revolution for ordinary people was the reorganisation of local government. Cédric Chambru, Emeric Henry and Benjamin Marx tell Tim Phillips how local state capitals emerged as a result, and what this tells us about how state capacity develops.

Read the VoxColumn about this research: Chambru, C, Henry, E and Marx, B. (2022), Building a state one step at a time: Evidence from France, VoxEU.org, 03 February.

Download the free DP: Chambru, C, Henry, E and Marx, B. 2021. 'The Dynamic Consequences of State-Building: Evidence from the French Revolution'. CEPR

Cédric Chambru, Emeric Henry, Benjamin Marx, 03 February 2022

Effective states can raise taxes and armies, enforce laws, and produce public goods, but how these functions are built over time is not well understood. This column studies the administrative reform initiated by the French Revolution, one of history’s most ambitious state-building experiments, to shed light on the sequence of steps needed to build effective states. Cities chosen as local administrative centres initially invested in the state’s capacity to extract resources from citizens. These cities may not have grown in the short run, but the investments eventually delivered payoffs in terms of public goods, which stimulated long-run growth. 

Tim Besley, Robin Burgess, Adnan Khan, Jonathan Old, Guo Xu, 08 November 2021

How does bureaucracy matter for development? Over the last years, an enormous interest in this question has created a large body of research, mostly focused around evidence from field experiments and micro-level administrative data. This column reviews this recent literature and embeds it in the broader discussion on how bureaucracies contribute to economic development. The authors argue that this recent evidence matters, but also encourage future research to study bureaucracies as systems, and to analyse their systemic relations to politics, citizens, firms, and NGOs.

Nauro Campos, Fabrizio Coricelli, Emanuele Franceschi, 07 November 2021

Economic integration has certainly deepened and, more recently, changed enormously. Until the late 1990s integration was mostly trade-centred, while it now can be better described as institutions-centred. This column introduces the notion of ‘institutional integration’, identifies its main features, and provides estimates of its net benefits. With one of the first applications of the synthetic difference-in-differences estimator and using data from the 1995 enlargement of the EU, the authors find that the failure to embrace institutional integration by Norway (compared to ‘only’ embracing deep integration) generates yearly productivity losses of about 0.6 percentage points.

Tim Besley, Chris Dann, Torsten Persson, 18 June 2021

The determinants of economic development have been debated for many years. However, some of these determinants have been hard to measure internationally. This column reviews evidence from 25 years of data to argue that countries form persistent ‘development clusters’ according to their levels of internal peace and state capacity.

Paola Giuliano, Imran Rasul, 18 June 2020

If social distancing is crucial to slow the spread of Covid-19, it is important to know what determines whether individuals will effectively adopt the practice. This column draws on real time data collected across many different countries to document important drivers of compliance with social distancing. These drivers are found to vary with social capital, trust in government and political beliefs.

Antonio Ciccone, Adilzhan Ismailov, 17 May 2020

Persistence of democratisation following transitory economic shocks plays an important role in the theory of political institutions. This column tests the theory of democratic tipping points using rainfall shocks in the world’s most agricultural countries since 1946. Negative rainfall shocks have a strong and transitory effect on agricultural output, but a persistent positive effect on the probability of democratisation even after ten years. These findings suggest that even if it were short-lived, the COVID-19 crisis is likely to tip the scales against some authoritarian regimes and lead to persistent democratisation.

André Blais, Damien Bol, Marco Giani, Peter John Loewen, 07 May 2020

Major crises can act as catalysts – either destabilising or strengthening the political regimes that oversee them, depending on how citizens view their government’s performance. This column analyses a cross-country survey in Western Europe during March and April, a period that saw many of these governments enforce lockdowns in response to COVID-19. It finds a rally effect: individuals who took the survey immediately after lockdowns showed more support for incumbents and for democratic institutions than those who took it before.

Enrico Perotti, Oscar Soons, 18 February 2020

A monetary union among diverse economies enhances trade and financial integration, but also has redistributive effects. The column argues that the euro led to implicit devaluations and revaluations, boosting the productive incentives and fiscal capacity of strong members at the cost of others. The euro was thus a transfer union from the start, with implicit flows from the periphery to the core. 

István Székely, Melanie Ward-Warmedinger, 23 February 2019

While there is a large literature on the political economy of reforms, surprisingly little is known about reform reversal. Based on an investigation of reform reversals in former transition countries, this column argues that once reforms are introduced, self-enforcing social norms and social learning should catch up with the new reality to create domestic anchors. Social norms have not always been strong enough to outweigh the opportunistic behaviour of politicians seeking short-term windfall gains. External anchors, while helping to protect reforms, cannot replace domestic ones.  

Manapol Ekkayokkaya, Suppasit Jirajaroenying, Christian Wolff, 09 January 2019

Retail investors are generally considered to be uninformed noise traders, but a recent literature suggests that such investors accumulate novel information about smaller stocks. Using new data from Thailand, this column argues that retail investors systematically outperform institutions, especially domestic institutions. In addition, retail investors have a comparative advantage in executing trades of small stocks. 

Tim Besley, 03 October 2018

Tim Besley of the LSE-Oxford Commission on State Fragility, Growth and Development talks about the Commission's recent report on escaping the fragility trap.

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.

Prateek Raj, 04 January 2018

In medieval Europe, trade depended on personal relationships, which were usually mediated by merchant guilds. The column argues that increasing incentives to do business with merchants outside the guild system, and the availability of better information about those trading partners, led to the decline of merchant guilds in the 16th century. This occurred first in coastal cities that were early adopters of printing technology.

Paolo Buccirossi, Giovanni Immordino, Giancarlo Spagnolo, 11 October 2017

Schemes that reward whistleblowers who provide evidence of corporate fraud have been effective in the US, but have generally been resisted in Europe. This column argues that a policy that trades off rewards to those who blow the whistle against punishment for fabricating evidence would increase both detection of, and punishment for, fraud. This will only be effective, however, if whistleblowers are protected from retaliation and the policy also invests in making court findings more accurate.

Benjamin Enke, 21 September 2017

Daily life requires us to cooperate with a large number of – potentially unrelated – people. This column argues that cultural variation in the ways people cooperate with each other are empirically associated with fundamentally different religious beliefs, moral values, emotions of shame and guilt, social norms, and institutions. This suggests that various psychological, biological, and institutional mechanisms co-evolved to support specific social cooperation systems.

Giacomo Ponzetto, 13 September 2017

What is the link between citizens, insitutions and globalisation? In this video, Giacomo Ponzetto underlines the relevance of psychology and availability of information. This video was recorded at the Barcelona Graduate School of Economics in November 2016.

Joshua Aizenman, Yothin Jinjarak, Gemma Estrada, Shu Tian, 19 July 2017

The impact of the Global Crisis of 2008 played out differently in middle-income countries compared to developed countries. This column argues that the associations of growth level, growth volatility, shocks, institutions, and macroeconomic fundamentals have changed in important ways after the crisis. Educational attainment, share of manufacturing output in GDP, and exchange rate stability appear to increase the level of economic growth. Exchange rate flexibility, education attainment, and lack of political polarisation reduce the volatility of economic growth.

Emmanuelle Auriol, Jean-Philippe Platteau, 09 April 2017

The extent to which Islam is responsible for the problems encountered in countries in which it dominates has been the subject of much attention. This column explores the effect of religions with differing organisational structures on progressive institutional reforms, state corruption, and political stability. Decentralised religions such as Islam are more conducive to institutional stagnation and political instability than centralised religions such as Catholicism or Eastern Christianity, with negative consequences for long-term development.

Louis Kasekende, 19 September 2016

How to strengthen and create institutions that support development? In this video, Louis Kasekende discusses the role of formal and informal institutions in the financial sector.



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