Political Economy of Emerging Market Countries - Abstracts

ABSTRACTS

 

Meir Alkon "The Developmental Effects of Special Economic Zones: Evidence from India’s States"

Can state policymakers use export-oriented economic policies to promote development in local areas? Arguments and research drawing on the case of China’s Special Economic Zones suggest that subnational political entities can target specific policies in order to jumpstart local and regional socioeconomic development. Since 2006, Indian states have pushed similar zones in the face of major protests, arguing that they will be engines for development. In this paper, I provide the first systematic analysis of the developmental effects of these zones, leveraging an original dataset on the location of India’s SEZs, matched with 2001 and 2011 census data containing a host of social and economic developmental variables. The findings do not suggest that Indian SEZs have generally had significant effects on local socioeconomic development. In addition, I present an explanation for the failures of SEZ policy in India, in contrast to China, arguing that different political incentives have led to diverging development outcomes. I outline a mechanism by which Indian state politicians can use state-owned development corporations for rent capture, undermining the potential effectiveness of SEZs. Moreover, I rule out a prominent alternative explanation, that co-partisan political alignment would explain the developmental underperformance of SEZs. The combination of available means for extracting rents and the absence of incentives to constrain such rent extraction explains the otherwise puzzling divergence in the regional developmental effects of SEZs in India and China.

 

Andy Baker and Vania Ximena Velasco-Guachalla “Is the Informal Sector Politically Different? Answers from Latin America”

Most of what political scientists think they know about the effects of informal labor status on mass political attitudes and behaviors in Latin America is impressionistic and speculative. In this paper, we present actual descriptive evidence on the micropolitical consequences of informality using surveys from 18 Latin American countries. We test two of the long-held scholarly impressions of informal workers—that informal workers are less politically engaged and right-leaning than formal-sector workers—both of which are grounded in a “dualist” conception of labor markets that views the formal and informal sectors as having little overlap. We find minimal evidence for these impressions. We argue that recent empirical findings consistent with a “revisionist” view of informality better account for our null results: Informal and formal labor are much more integrated than the dualist view holds. We also provide evidence to dismiss alternative explanations that would attribute our null results to the timing of our surveys, to arational sources of political behavior, or to measurement error.

 

Achin Chakraborty "Intergroup Disparities in Rapidly Growing Economies"

In spite of the renewed interest in the problem of inequality across the world in recent years, discussions on inequalities based on ethnic, racial or caste groups have been less visible than general or inter-personal inequality. On the contrary, there has been a growing scholarly interest in assessing inequalities between the social groups (Scheduled Castes, Scheduled Tribes and others) in India in the past two decades or so. While the interrelationship between economic development and economic inequality has long been explored by economists, and the earlier belief in an inverted U-shape between the two has been questioned in the light of extensive cross-country data for longer periods, there is very little analytical exploration into what might happen to intergroup inequality in course of rapid economic development. In this paper, we first assess changes in measured inequalities between social groups in India in both income and non-income dimensions. In the process we re-examine some of the issues in measurement of inter-group inequality, which would help us relook into inter-group disparities in other countries as well. Finally, we try to relate changing inter-personal and inter-group inequality to the fact that some of these countries have been growing at a much faster rate compared to others in the developed world.

 

Judy Goldstein  “Trading in the 21st Century: Is there a Role for the WTO?”

As the World Trade Organization begins its third decade, its future is less certain than at any other point in its history. While there is no move to dismantle the organization, the initial expectation that the WTO would be the fulcrum for future international trade agreements has not been met.  At best, we can say that its tenure has had mixed results.  On one hand, the organization continues to be an adjudication focal point, with nations using panel processes when there is contestation over rule interpretation.  But more problematic given the function of the organization, the legislative arm of the WTO is moribund.  if we were to compare the first two decades of the WTO with that of its predecessor organization,  the General Agreement on Tariffs and Trade, the WTO would appear lackluster.  This essay examines the scholarly literature on the trade regime and argues that this pessimism may be misplaced.

 

Indrani Gupta and Samik Chowdhury "Universal Health Coverage in BRICS: What can India learn from the BRICS experience?"

Universal Health Coverage (UHC) has been a major topic of discussion and debate in the recent past globally, especially since the passage of a UN General Assembly resolution on universal health coverage (UHC) in December, 2012. While global organizations such as the WHO and the World Bank have defined UHC, it is still not apparent that all countries interpret UHC in a similar fashion. It has been argued that UHC has been labelled in a variety of ways and implemented based on the interpretation by countries, indicating the need for a global operational definition. Evidence does exist, however, to indicate that broader health coverage generally leads to improved health, especially for the poor via better access to services. The BRICS countries as a whole are not necessarily the best examples of how UHC is to be implemented. The group is small, the economic and political situations are somewhat different and the experiences are diverse. Nevertheless, this diversity of experiences is possibly sufficient to understand the “do’s and don’ts” in the path to UHC, and would contain important lessons for India. We aim to expand the analysis substantially with more recent data and also use a slightly different approach to understand where India’s position vis-a-vis the other BRICS countries in the context of UHC.

 

Ashwani Kumar "Polymorphic Regimes or Fragmented Leviathans in India?"

What explains the prevalence of multiple development trajectories in India’s sub-national context? Using insights from Esping-Andersen’s typology of the ‘three worlds of capitalism’ and arguing that welfare regimes are neither monolithic nor static as they are shaped by variable capacity of state and competitive vote-seeking politicians in democracies, this stylized presentation contests the notion of national proposes to revise the dominant statist and societal perspectives on the analytical salience of political regimes and structures of civil society in shaping welfare outcomes in India’s states at the sub national level.

 

Sripad Motiram "Social Stratification in India and Brazil Since the 1990s: A Comparative Analysis"

India and Brazil, two members of the BRICS group of countries, are prominent and emerging
economies in the world today. This paper presents a comparative analysis of inequality and
poverty in these countries in roughly the past two and half decades. During this period, India has
been one of the fastest growing countries in the world. However, inequality has increased and
progress on the front of poverty reduction has been disappointing. While growth in Brazil has
been less impressive, inequality and poverty have reduced substantially. After documenting these
trends, the paper discusses the explanations for these phenomena arguing that a crucial difference
between the two countries has been in the implementation of social policies.

 

Helen Milner and Nita Rudra. "Globalization and the Political Benefits of the Informal Economy"

Why do large informal sectors persist in developing countries that are globalizing? To answer this question, we explore whether or not foreign direct investment (FDI) affects government incentives to regulate informal workers, who are often the least well–off in most developing countries. Informal labor is defined as work that takes place outside all government regulation. It makes up a large if not majority of workers in many developing countries. We argue that FDI in developing countries may not change government (and informal worker) incentives to reduce the size of the informal labor population, and indeed that there may exist an equilibrium among political leaders, capital owners and labor that fosters the maintenance of informality in the presence of globalization. In particular, incumbents may have good reasons for not enacting and enforcing policies that reduce or outlaw informal labor. We indirectly explore this by examining how informal and formal workers respond to governments in districts with high levels of FDI. We claim that if our intuition is correct, one implication is that informal labor should reward politicians for increased FDI, while formal workers will be neutral. Our data analysis from Indian household surveys lend support to our claim that informal workers increase their confidence in incumbent politicians more when they bring in more FDI, thus indirectly supporting the claim that politicians may prefer to maintain informal labor.

 

R Nagaraj. "China’s and India’s Economic Performance after the Financial Crisis"

Economic growth in China and India – together accounting for about 18 per cent of global GDP in 2015, and 1/3rd of world population – decelerated sharply after the financial crisis. There was some recovery until 2011-12 on account of monetary and fiscal stimulus, and resumption of capital inflows on account of QE policies in in the developed economies. With continued great recession, the widely asked question is this: Can these giant domestic-oriented economies help revive global economic growth now?

As export led boom for both the economies ended, they are now faced with severe demand constraint. China’s sustained investment has led to fall in productivity of investment; India witnessed a sharp fall in investment demand. Both countries are now saddled with bloated private corporate debt, due to credit binge during the boom and burst. If China can avoid (potential) debt deflation and bubble like situation in property market, re-orients investment towards social infrastructure, and raise consumption growth economic growth could be improved. India probably need to revive investment demand by stepping up public infrastructure investment and relive widely needed supply constraints; and re-direct bank credit for agriculture and small and medium sized enterprises to stimulate agriculture growth and labour intensive manufacturing. China’s constraints to shift the policies appear more political economic; India perhaps needs is to re-configure fiscal rules, and a more active role of the state.

 

Dennis Quinn, J. Bradford Jensen and Stephen Weymouth  “Winners and Losers in International Trade: The Effects on U.S. Presidential Voting”

This paper demonstrates that international trade directly influences U.S. presidential elections. In contrast to prior studies, we explore the electoral implications of the increasing tradability of services and the large U.S. surplus in services trade. Our paper builds on prior work showing that job insecurity from import competition in manufacturing diminishes political support for incumbents. We construct novel measures of the tradability of an industry using establishment-level data covering nearly all U.S. economic activity. We find increases in incumbent party vote shares in counties with large numbers of workers in high-skilled tradable services as well as goods, and decreases in counties with high employment in low-skilled manufacturing. Incumbent parties are particularly vulnerable to losing votes in swing states with many low-skilled manufacturing workers. In national-level models, we show for the first time that increasing imports (exports) are associated with decreasing (increasing) presidential incumbent vote shares. These effects are large and politically consequential. We find an Electoral College incentive to protect the manufacturing sector and to oppose trade agreements.

 

Kenneth Scheve, Cameron Ballard-Rosa, and Mashail Malik   "What does the U.K. Want for a Post-Brexit Economic Future?"

The resolution of Britain's exit from the European Union makes the multidimensional character of globalization an explicit and salient choice. The question before the country is what should the character and extent of integration of goods, services, people, and capital be with Europe and the rest of the world. This paper fields a conjoint survey experiment on a representative sample of UK residents to measure these preferences and evaluate their economic and cultural origins. We find strong evidence that UK citizens overwhelmingly support free trade not only with Europe but with the rest of the world and that there is consensus about this among those who voted for and against Brexit. Similar liberal agreement is found for the regulation of foreign investment and the service sector. On immigration, average preferences are broadly supportive of free movement for EU citizens though not for immigrants in the rest of the world. Moreover, opinions over all forms of immigration are highly polarized. Finally, we find on average respondents do prefer forms of integration that allow some degree of independence to the UK in setting its own regulations. The post-Brexit globalization future that Britain wants is one not so different its deeply integrated present, though it is likely to be one with high degrees of political conflict about the heightened movements of people in modern Europe.

 

Annapurna Shaw "The challenges of urbanization in India: Towards a more humane urbanism"

What path is India taking in its urban transition and how can it be made more “people-centered and sustainable” and more humane? This larger question is examined in my paper by a closer look at changes in the Indian state’s character and ideology, the socio-political context of contemporary urban India, and public policy choices in one aspect of the country’s urban transition challenge, namely, low income housing. The term ‘humane’ as used in this paper implies a broader sense of compassion and tolerance for diverse and sentient life forms, human and non-human. Section 2 briefly discusses changes in the Indian state’s character and ideology while Section 3 presents the socio-political context of contemporary urban India, marked by the presence of two concurrent processes; economic liberalization and globalization on the one hand, and the rise and consolidation of the majoritarian politics of the nationalist right, on the other. Section 4, focuses on low income housing provision by the state and its failures rooted in its views about housing and the poor as well as in shortfalls in delivery; Section 5 takes the case of successful implementation of a central government housing program in the city of Nanded, Maharashtra to highlight the positive results when municipal authorities take a humane view and incorporate local people’s concerns during the process of program implementation. Section 5, concludes the paper with a discussion of the idea of a ‘humane urbanism’ in the context of Indian cities and with observations on the possibilities and limitations of achieving it under the existing political and economic framework.

 

Anup Sinha "Sustainable Development: The Problem of Economic Inequality and a Crude Look at the Whole"

Sustainable development is a complex concept. It draws on a number of branches of knowledge beginning with the physical and biological sciences, to ethics and political economy, to economic policy formula ons and the challenge of forecasting the future. In all these distinct aspects that converge to a knotty problem, the concept of economic inequality is fundamental in defining the core issue of sustainable development.  In this paper we first take a look at how sustainable development can be de ned in an operational form to aid decision making. Next, we take a look at using those definitions and indicate how dynamic decision making may be quite difficult and how our attitude to inequality comes into play. Finally, we discuss what kinds of changes are necessary to make human society sustainable not only for people inhabiting the planet, but also for all living beings.

 

Hema Swaminathan and Deepak Malghan. "The Contribution of Intra-household Gender Inequality in Earnings to Overall Inequality: Evidence from Global Data, 1973-2013" 

Intra-household inequality continues to remain a neglected concept despite renewed focus on income and wealth inequality. Using the LIS micro data, we present evidence that this neglect is equivalent to ignoring up to a third of total inequality. For a wide range of countries and over four decades, we show that at least 30 per cent of total inequality is attributable to gender inequality in earnings within the household. Using a simple normative measure of inequality, we comment on the welfare implications of these trends.

 

Erik Voeten,  “Where is U.S. Multilateral Leadership?”

U.S. leadership is essential for reconceptualizing global multilateral institutional cooperation. Yet, such leadership has by and large not been forthcoming in the post-Cold War period. There are three related political reasons for this. First, despite the victory in the Cold War the U.S. has become increasingly isolated in international organizations. Second, the ecology of the institutional landscape has become less favorable for the U.S. Third, domestic politics imposes strong constraints for delegating new authority to formal supranational institutions. I identify three ways forward. First, the U.S. can help repurpose the core institutions it helped establish in the aftermath of World War II. Second, the U.S. can adopt a more exclusionary approach to influence global rules through informal clubs, formal plurilateral institutions or the application of extraterritorial jurisdiction. Third, the U.S. can lead on inclusive multilateral initiatives without treaty commitments or meaningful delegation. I discuss the promises and pitfalls to these approaches using examples from various issue areas.