REVIEW SESSION

Political Economy of Development

Followed by: Civil Society and Social

Capital

Pablo Balan

GOV 20

December 14 2017

Political Economy of Development

The World Until the Industrial Revolution

Modernization theory

I Traditional Society → Modern Society

I Transition happens in stages [Rostow]

I The last stage is political (democratization) [the oppositeof institutionalism]

I One path: the future of Bolivia is England

The Puzzle: No Convergence, Divergence

Major theories of comparative development

I Culture [Weber]

Individualism and Development

Figure: Source: Gorodnichenko and Roland (2010)

Problems with cultural arguments

I Culture is a constant. You cant explain variation with aconstant

I Culture is likely to be a consequence of development, nota cause

Major theories of comparative development

I Culture [Weber]

I Geography [Montesquieu, Jeffrey Sachs, Jared Diamond]

Geography: Latitude

How does geography matter?

I Climate determines work effort, incentives, productivity[Montesquieu]

I Climate determines technology (especially agriculture)[Jared Diamond]

I Disease environment [Jeffrey Sachs]

Geography: Disease Environment

Problems with geographic arguments

I Geography also a constant

I Can’t explain critical cases (North Korea vs. SouthKorea, Nogales vs. Arizona)

I Reversal of fortune

Reversal of Fortune

Major theories of comparative development

I Culture [Weber]

I Geography [Montesquieu, Jeffrey Sachs, Jared Diamond]

I Institutions [Acemoglu and Robinson, Douglass North...]

Institutions and Development

What is an institution?

Douglass North: Institutions are therules of the game in a society [...] thehumanly devised constraints thatstructure political,economic andsocial interactions.

Acemoglu and Robinson in one slide

What are good institutions?

I Inclusive economic institutions:I Protect property rightsI Relatively equal access to economic resources

I Inclusive political institutions:I Constrain rulersI Disperse political power

I Good institutions occur indemocratic countries !

Never forget

Correlation is not causation

Problems with institutional arguments

I Institutions vs. policy [South Korea]

I What are “good institutions”? [Risk of tautology]

I Institutions are endogenous (a consequence of otherstuff) [Modernization theory]

The Political Dimension of Development

I Good institutions [Acemoglu and Robinson]

I Strong, autonomous stateI Good [Gershenkron, Wade]I Bad [Bates]

I Dependency theory

Political Regimes and Economic Growth

In favor of democracy

I Autonomous rulers can be predatory

I Democracies protect property rights [North, Acemoglu]

In favor of autocracy

I Some autocracies also protect property rights

I Democracy favors short-term consumption –underminesinvestment

I Democracy is vulnerable to interest groups andparticularistic pressures

U N P A C K !

Take-away points

I Economic development has a political dimension(incentives of politicians)

I Don’t forget the big picture (vs. exceptions)

I Theoretical relationship between regimes and growth isnot obvious

What have we learned?

_\_( ") )_/

_

Civil society and social capital

Tocqueville

In democratic countries the science ofassociation is the mother of science;the progress of all the rest dependsupon the progress it has made

Civil society

The realm of civic organizations thatare independent of the state

Variation in institutional performance

Measuring institutional performance

I Cabinet stability

I Budget promptness

I Statistical and info services

I Reform legislation

I Legislative innovation

I Day care centers

I Family clinics

I Industrial policy instruments

I Agricultural spending capacity

I Local health unit expenditures

I Housing and urban development

I Bureaucratic responsiveness

Civic community: conceptual dimensions

I Civic engagement

I Political equality

I Solidarity, trust, tolerance

I Associations

Civic community: indicators

I Preference voting: personalism

I Referendum turnout

I Newspaper subscription

I Associations

Variation in civic community

The two are highly correlated

Putnam in one slide

Putnam in one slide

Putnam in one slide

Social capital

NORMS OF RECIPROCITY+

NETWORKS OF CIVIC ENGAGEMENT

State and society

I The characteristics of the state/democracy depend on thecharacteristics of society

I Some people: strong state, weak society OR weak state,strong society

I Putnam: strong society, strong state

Alternative explanations

I Conflict

I Social stability

I Education

I Urbanization

I Personnel Stability

I Communist party

I Modernization theory

Critiques of social capital

I Causal chain unclear. How is trust engendered bybird-watching?

I The state can also be a source of trust

I The demands may not be democratic [Berman]

Bowling for Fascism

Take-away points

I Civil society is a space, not a homogenous set of actors.Not necessarily nice.

I Social capital vs. institutionalism and modernizationtheory

That’s all

Questions?