Political Flashcards
What gave rise to the state?
Required for impersonal contract enforcement (North 1991)
Views of good governance?
Post WW2: Omniscient social maximiser
1980s-2008: Friedman ‘obstacle’
Post 2008: Generally, enabling middle ground with revival of Keynesian policy
Failed state institutions example
1960s-70s India development planning
Ambitious targets, inadequate resources
Bureaucracies (local)
Biased/ weak to influence of rich
Why may state institutions fail
Individuals know preferences best?
Controls can create incentives for ‘directly unproductive profit seeking’
Success story (Asian tigers)
Pick winners using infant industries argument.
Governing the market to get the prices right.
Promotional, not restrictive policy
Democracy as bad for growth theory?
Plato: The Republic argument: Democracy as harmful if population is poorly educated.
Democracies may have more constraints than Autocracy
Living stand to democracy
Lipset Hypothesis 1959
Democracy effect on other objectives
No strong influence on growth but positive on pol rights (eg Dasgupta and Weale 1992)
Acemoglu et al 2001
Europeans settled leading to good institutions (exploitative if they didn’t).
Suggests settler mortality as an exogenous source of transplanted institutional quality.
Acemoglu et al result
Regress GDP and settler mortality leads to negative relationship.
Settler mortality explains 25% of current institutions.
Significant path dependence as well as influence of political institutions
Refutation of Acemoglu et al
Glaeser et al 2004
Europeans also brought human capital when they settled and not when they exploited! This is what what caused LR growth
If you accumulate K under dictatorship leads to good institutions later. Therefore, this way causality!
What are the names of the Key papers in this topic?
Acemoglu et al 2001 Glaeser et al 2004 Lipset Hypothesis 1959 Barro 1996 Plato's The republic North 1991
Democracy as bad for growth empirical?
Barro 1996: Effect of democracy on growth weakly (insignificantly) negative
