Author Archives: Benjamin Chris Zissimos

Welcome New Members March 2019

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We would like to welcome the following new member to the InsTED Network

Prof Julian Jamison (University of Exeter Business School)  His research focuses on the interaction between individual preferences, decisions, and well-being on the one hand, and institutional policies on the other.  Much of it has been carried out in more than a dozen countries, especially sub-Saharan Africa.

Prof John Whalley (University of Western Ontario). His research interests lie in the areas of general equilibrium, international trade, public finance, taxes, China and the Asian economies, and environmental economics with a focus on climate change.

Financial Constraints, Institutions and Foreign Ownership

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Ron Alquist, (AQR Capital Management), Nicolas Berman (Aix-Marseille University), Rahul Muhkerjee (Graduate Institute, Geneva), and Linda L. Tesar (University of Michigan)

Cross border mergers and acquisitions (CBMA) as a form of foreign direct investment (FDI) by multinational corporations (MNCs) have grown rapidly in the last two decades. For emerging market economies (EMEs) in particular, the number of CBMA, mostly by firms from developed markets, grew at an average annual rate of 14.5% during 1990-2014. While the determinants of the volumes of these flows are well studied, relatively little is known about what drives MNC ownership structure choices when acquiring EME firms. Yet, existing research has established that the extent of foreign ownership is an important determinant of a number of outcomes that have traditionally motivated policy makers to encourage FDI.  These include post-investment changes in labor productivity, wages, or export participation, and spillovers through technology transfer to subsidiaries.[1] In a forthcoming article, we set out to study the underlying determinants of FDI ownership structure in a broad set of EMEs.[2]

In a nutshell, our main argument is as follows.  Acquiring firms in EMEs entails both benefits and costs for MNCs from developed nations. Among the benefits, MNCs may have superior access to funding that they can use to relieve financial constraints of target firms, thus increasing the profitability of the acquired firm. At the same time, these acquisitions come with costs inflicted by weak local institutions, since operating firms in EMEs involves sourcing local inputs in an unfamiliar environment with insecure property rights and distortionary policies. So, how do MNCs deal with these competing forces? We show in our paper that an MNC’s choice of ownership structure is critical in balancing the aforementioned benefits and costs. To this end we develop a theoretical model that emphasizes the role of finance and institutions, and that delivers predictions about the optimal degree of foreign ownership, which we then take to the data.

To highlight the trade-offs facing a foreign acquirer, our theoretical model postulates that production in EMEs requires capital and a local input. The foreign acquirer solves for an optimal ownership contract between itself and the domestic target firm that captures its advantage in having greater access to capital markets relative to the credit-constrained target, and the potential disadvantages of operating a firm in an EME. The MNC’s disadvantage compared to local firms, which is due to weaker institutions, is modeled as a markup on local inputs that is paid only by an MNC. The markup thus incentivizes operating the firm with a local co-owner. The MNC then faces a choice between obtaining full control of the credit-constrained target, in which case it is compelled to pay a higher price for the local input, or to take partial ownership, in which case the domestic equity owner can provide the local input at a lower price.

Three distinctive sets of predictions emerge from the model. The first and second pertain to the ownership structure chosen by an MNC. Full (relative to partial) foreign ownership of targets is predicted to be more likely in sectors that have a greater dependence on external finance, and in countries that are less financially developed, while better institutions are found to tilt the scales towards full ownership. The effects of institutions and financial development are also predicted to be the largest for the sectors of the economy most dependent on external finance. The second set of predictions pertains to partial ownership. Here the model predicts that financial factors should play a weaker role in determining the precise size of partial stakes, while the input price markup is predicted not to influence the ownership structure in partial acquisitions at all. Our final predictions, which relate to the overall likelihood of foreign acquisitions, are that foreign acquisitions are more likely in sectors that have a greater dependence on external finance, in countries where financial markets are less developed, and when institutions are better.

We test these theoretical predictions in a large panel of CBMA transactions by developed market firms in fourteen EMEs over the period 1990-2007. We use the measure of sectoral external finance dependence due to Rajan and Zingales and country-level credit-GDP ratios as our main financial indicators, and anti-corruption indices as our baseline measure of institutional quality.[3]

The regression evidence confirms the main predictions of the model. The estimated effects are also quantitatively large. For example, the likelihood of an MNC choosing to own a domestic firm fully versus partially is predicted to be:

  • 22 percentage points larger for the sector with the highest (professional and scientific equipment) versus the lowest (tobacco) level of dependence on external finance
  • 21 percentage points lower in the most (Indonesia) versus the least (Chile) corrupt country
  • 14 percentage points lower in the most (South Africa) versus the least (Peru) financially developed country

As per the model, while dependence on external finance has the strongest effect in financially underdeveloped countries, it ceases to matter when local financial development, measured by private credit over GDP, exceeds 70%. In the same vein, external finance matters roughly three times more in countries with the lowest levels of corruption than in the most corrupt countries.

Our model’s predictions concerning the effect of financial factors on the overall prevalence of cross border acquisitions across sectors and countries are also borne out by the data. For example, we find that moving from the sector that is most to least dependent on external finance raises the share of CBMA (among all acquisitions) by 22 percentage points. At the same time, the share of CBMA is predicted to be 27 percentage points lower in the most versus the least financially developed country.

Taken together, our theoretical model and empirical evidence show that the interaction of financial, institutional, and technological factors plays an important role in determining the pattern of foreign ownership in North-South FDI flows. It also throws light on a number of empirical features of CBMA across sectors and countries, for example, why full foreign acquisitions are seldom observed (roughly 19%)  in countries such as Thailand that have both developed financial markets and weak institutions.  Our results also point towards improvements in institutions as a way to encourage higher MNC equity participation. For example, according to our estimates, a country like China would experience a doubling in the share of full acquisitions if it were to improve its corruption situation to the levels of Chile.

References

Alquist, R., N. Berman, R. Mukherjee, and L.L. Tesar, (forthcoming); “Financial Constraints, Institutions, and Foreign Ownership.” To appear in Journal of International Economics, DOI: https://doi.org/10.1016/j.jinteco.2019.01.008.

Bircan, Çağatay, (2019); “Ownership Structure and Productivity of Multinationals.” Journal of International Economics 116 (2019): 125-143.

Havranek, T., and Z. Irsova, (2011); “Estimating Vertical Spillovers from FDI: Why Results Vary and What the True Effect is.” Journal of International Economics 85(2): 234-244.

Javorcik, B. S., and M. Spatareanu, (2008); “To Share or Not to Share: Does Local Participation Matter for Spillovers from Foreign Direct Investment?” Journal of Development Economics 85(1-2): 194-217.

Rajan, R., and L. Zingales, (1998); “Financial Dependence and Growth.” American Economic Review 88.3 (1998): 559-86.

Endnotes

[1] See for example, Javorcik and Spatareanu (2008),  Havranek and Irsova (2011), and Bircan (2019).

[2] See Alquist, Berman, Mukherjee and Tesar (forthcoming).

[3] See Rajan and Zingales (1998).

Workshop on Development Economics: Organisations, Institutions and the Mind

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24-25 June 2019, University of Kent

The School of Economics at the University of Kent is hosting a workshop, sponsored by the Royal Economic Society, that will bring together internationally leading and junior academics from the fields of Political Economy, Organisational Economics and Development Economics working on questions relating to identity, norms, motivation, belief formation and their effect on the functioning of institutions and organisations.

Confirmed speakers include Professors Sonia Bhalotra (University of Essex), Maitreesh Ghatak (LSE), Lakshmi Iyer (University of Notre Dame), Gilat Levy (LSE), and Dilip Mookherjee (Boston University).

A call for papers for the workshop is currently open. Details about the call can be found here.

The WTO and Economic Development

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Ben Zissimos (University of Exeter Business School)

My new edited volume tilted The WTO and Economic Development, brings together a collection of perspectives on different aspects of the purpose and institutional design of the World Trade Organization (WTO), and how these relate to economic development.[1]  The perspectives are contributed by a group of leading scholars in the economics of international trade.  The role that the WTO and its progenitor, the General Agreement on Tariffs and Trade (GATT), have played to date in facilitating economic development, and the role that the WTO can reasonably be expected to play in the future, is the unifying theme.

The following summary is based on my introductory chapter, which presents a synthetic literature review to develop context for the contributions that follow and draws basic insights.

Chapter 1, by Robert Staiger, sets out a comprehensive framework for formally incorporating non-tariff measures (NTMs) into a model for analyzing a multilateral trade agreement, taking tariffs into account as well.  The chapter notes that while developing countries tend to impose border NTMs on imports from developed countries, developed countries tend to impose behind-the-border NTMs on imports from developing countries.  A key contribution of the chapter is to show that an agreement involving border-NTMs is in fact amenable to a terms-of-trade motivation.  Since border-NTMs can exert a negative terms-of-trade externality on trade partners, by causing a reduction in demand for their exports, an agreement over border-NTMs has the same motivation of escaping from a terms-of-trade externality as in the conventional tariff-based ‘terms-of-trade theory’ of trade agreements.[2]

Chapter 2, by Chad Bown, adopts a more traditional focus on tariffs.  The motivation is compelling, arguing that there are 3.5 billion people in the world who have yet to benefit from an agreement to lower tariffs under the GATT/WTO, the overwhelming majority of whom are in developing countries.  The chapter tests for developing countries an implication of the terms-of-trade theory of trade agreements that has been shown to hold in developed countries.  The implication focused on in the chapter is that, through WTO negotiations, members are requested to take on lower tariff binding commitments in products for which they have higher market power, and thus where their tariffs (if left unchecked) would result in larger terms-of-trade externality losses for trade partners.  The chapter identifies well-defined groups of developing countries for which the implication holds, and groups for which it does not, showing that the terms-of-trade theory is relevant to developing-country trade liberalization through trade agreements but is not the only motivation.

Chapter 3, by Rodney Ludema, Anna Maria Mayda, and Jonathon McClure, studies the evolution of the so-called ‘MFN free rider problem’, an implication of the terms-of-trade theory.  In their earlier work, Ludema and Mayda show that an exporting country’s benefit from an MFN tariff concession by another country is proportional to exporter concentration.[3]  An exporting country’s willingness to pay for an MFN tariff concession on the product it exports with tariff concessions of its own depends on how much its refusal to offer concessions would reduce the MFN tariff concession.  The smaller the exporter, the less its refusal would mitigate the tariff cut, and thus the less costly it would be for the exporter to refuse to make a concession, thus free-riding on the concessions of other countries.  An intriguing contribution of the chapter is to show that, through the growth of trade with emerging economies such as China since 1993, the MFN free rider effect is found to have gotten worse.

Chapter 4, by Xuepeng Liu, considers a puzzle concerning so-called non-member participants (NMPs).  NMPs consist of three groups: colonies and overseas territories of GATT members; newly independent states; and provisional members.  NMPs are relevant here because they tend overwhelmingly to be developing countries.  The first econometric literature on the effects of the GATT/WTO explores whether member countries really have different trade patterns than outsiders, thus assessing the effectiveness of the GATT/WTO in liberalizing trade.[4]  The literature shows that they do, but in the process finds an ‘NMP puzzle’: while two formal GATT members trade 61 per cent more than the baseline case of neither country being a formal member nor an NMP, two NMPs trade 140 per cent more than the baseline.  It is counterintuitive that the NMPs should trade even more than formal members.  Chapter 4’s main contribution is to show that the ‘NMP puzzle’ can be resolved by undertaking two relatively simple modifications to the original gravity equation approach of the prior literature.

In Chapter 5, David DeRemer develops a model for analyzing a trade agreement when autarky is the (unique) outcome of non-cooperation over trade policy.  While the canonical model of trade agreements with perfect competition and political economy has proved to be powerful and flexible in explaining many aspects of trade liberalization under the GATT/WTO, it cannot motivate a trade agreement of the kind that DeRemer considers.[5]  Specifically, in the canonical model, if each government has a unilateral preference for autarky then they must have a joint preference for autarky as well.  This limits the scope for studying situations where developing countries have adopted autarkic trade policies for specific sectors, but where there may nevertheless be scope to open these sectors as part of a trade agreement.  For example, developing countries have commonly produced busses and trucks domestically behind high tariff walls.  The chapter adopts a familiar ‘Brander-Spencer’ type model in which to motivate and explore the scope for a trade agreement when autarky is the non-cooperative outcome.

Chapter 6, by Fabrice Defever and Alejandro Riaño, looks at the export promotion policies implemented by China, and how these have promoted the transition of China from autarky in the 1970s to the world’s largest exporting economy today.  The point of departure for this chapter is a set of stylized facts on firm exporting behavior that has been established in the economics literature for the world’s major trading economies: relatively few firms engage in exporting; exporting firms tend to be more productive and hence larger; most firms that do export sell only a small fraction of their output abroad.[6]  The chapter reveals that, on the face of it, the characteristics of Chinese exporters fit the stylized facts listed above. The most striking difference, the chapter finds, is that a third of firms export almost all of their output: China is thus characterized as having a ‘dual export sector’.  The overall conclusion of the chapter is that China’s export promotion policies have been responsible for creating its dual export sector, and have been instrumental in China becoming the world’s largest exporter.

Chapter 7, by Eric Bond, considers whether an efficient trade agreement should allow for gradual trade liberalization to mitigate adjustment costs.  Recent research has shown that the adjustment costs of moving productive resources between sectors in response to trade liberalization are significantly higher than previously thought.[7]  These costs are likely to be particularly high for developing countries, where adjustment is likely to involve geographical relocation between rural and urban settings.  The analytical approach taken in Chapter 7 is to examine the optimal liberalization path between two large countries, where workers face adjustment costs of moving between sectors.  The results show that if tariffs are the only policy instruments available, then developing countries should be allowed longer phase-in periods if their marginal costs of adjustment are higher than in developed countries.  Hence, the analysis shows that there may be a normative justification for so-called ‘special and differential treatment’ of developing countries.

Chapter 8, by Eric Bond and Kamal Saggi, contrasts the roles of price controls and compulsory licensing (CL) to improve consumer access to patented foreign products in developing countries.  While the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement created a storm of controversy, the eye of the storm was over the implication that, as a result of the agreement, it became more difficult for poor people in developing countries to access medicine at affordable prices.  Under the terms of the TRIPS agreement, if a patent holder refuses to grant access to its product on ‘reasonable’ commercial terms then a government may grant a CL to a different firm to produce the product.  The main lesson of the chapter is that the social value of CL depends crucially on entry costs and the size of the market, and is ambiguous.  This ambiguity seems to be a feature of outcomes under the TRIPS agreement more broadly, making it difficult to assess the extent to which it is beneficial or harmful overall.

The ninth and final chapter, by Mostafa Beshkar and Mahdi Majbouri, tests empirically the outcomes of disputes, focusing on whether or not they lead to litigation, taking explicit account of whether or not the dispute involves developed and/or developing countries.  The chapter focuses on the fact that developing and developed countries show divergent behavior in the dispute settlement process.  A surprising pattern uncovered in Chapter 9 is that, in a dispute between a developed and a developing country, litigation is more likely if the developed country is the defending party.  As detailed in the chapter, 62 per cent of disputes in which a developed country presses charges against a developing country are settled without establishing a dispute panel. In contrast, only 44 per cent of disputes are settled without establishing a dispute panel if a developing country mounts a dispute against a developed country.  Importantly, the chapter shows econometrically that this asymmetry disappears after 2001, when the Advisory Centre on WTO Law (ACWL) was established to make available advice and subsidies to poorer countries, to help them with the costs of mounting a WTO dispute.

References

Bagwell, K., and R.W. Staiger, (1999); “An Economic Theory of the GATT.”  American Economic Review 89: 215-248.

Bagwell, K., and R.W. Staiger, (2002); The Economics of the World Trading System.  MIT Press, Cambridge (Mass), US.

Bernard, A.B., J.B. Jensen, S.J. Redding, and P.K. Schott, (2007); “Firms in International Trade.” Journal of Economic Perspectives 21(3): 105-130.

Dix-Carneiro, R., (2014); “Trade Liberalization and Labor Market Dynamics.” Econometrica 82(3): 825-885.

Ludema, R., and A.M. Mayda, (2009); “Do Countries Free Ride on MFN?” Journal of International Economics 77(2): 137-150.

Ludema, R., and A.M. Mayda, (2013); “Do Terms-of-Trade Effects Matter for Trade Agreements? Theory and Evidence from WTO Countries.” Quarterly Journal of Economics 128(4): 1837- 1893.

Melitz, M.J., and S.J. Redding (2014); “Heterogeneous Firms and Trade.” Handbook of International Economics, 4th ed, 4: 1-54.

Rose, A., (2004); “Do We Really Know That the WTO Increases Trade?” American Economic Review 94(1): 98-114.

Tomz, M., J.L. Goldstein, and D. Rivers, (2007); “Do We Really Know That the WTO Increases Trade? Comment.”  American Economic Review 97(5): 2005-2018.

Zissimos, B., (forthcoming) The WTO and Economic Development, accepted for publication by MIT Press, Cambridge (Mass), US.

Endnotes

[1] See Zissimos (forthcoming).  The MIT Press have kindly allowed me to post the full text of this volume on my website until the book appears in print.  Please see the above reference for a link.

[2] See Bagwell and Staiger (1999, 2002).

[3] See Ludema and Mayda (2009, 2013).

[4] See Rose (2004), and Tomz, Goldstein and Rivers (2007).

[5] The canonical model is due to Bagwell and Staiger (1999, 2002).

[6] See Bernard, Jensen, Redding and Schott (2007), and Melitz and Redding (2014).

[7] See Dix-Carneiro (2014).

Welcome New Members January 2019

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We would like to welcome the following new member to the InsTED Network

Prof Emmanuel Milet (Geneva School of Economics and Management).  His research interests lie in the fields of international trade, servitization of manufacturing firms, and ‘trade and labor’.

Prof Monika Mrázová (Geneva School of Economics and Management). Her research interests lie in the fields of International Trade, Political Economy and Industrial Organization.

Prof Marcelo Olarreaga (Geneva School of Economics and Management).  His research interests are in the fields of economic development and international trade.

 

Global Political Economy Network Conference: Economies and firms in an age of global uncertainty

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The Global Political Economy Network Conference is a new two-day academic event aimed at researchers in international economics, political economy, development economics and international business, as well as at policymakers.

Organised by the School of Business and Economics’s TRANSIT research interest group and Economics discipline group, Dr Huw Edwards and Dr Ahmad Ahmad are leading on the development of this event as an annual conference.

CALL FOR PAPERS

The GPEN Conference is expected to be of medium size, aimed at researchers in international economics, political economy, development economics and international business, as well as at policymakers. We have given a fairly broad theme of “An Age Of Uncertainty”, but we are interested in papers from all aspects of international political economy. In particular, we would hope to see papers on:

  • International trade policy and agreements
  • Multinational firms
  • Macroeconomic effects of international policy shocks
  • Policy development and practice

Papers from both experienced researchers and from PhD and early career researchers are welcome. We expect to accept a high proportion of submissions.

Keynote Speakers for the main conference

Journal symposium/special issues

  • To be announced

Special Policy Roundtable: Commercial diplomacy and the promotion of trade

Invited panellists include Huub Ruel, University of Twente; Jan Van Hove, KBC bank and KU Leuven; Richard Given, Department for International Trade. Others to be confirmed.

Submission of Papers

Titles and extended abstracts are to be submitted via conferencemaker

  • Closing deadline for submission: Wednesday, 20 Feb
  • Applicants notified by Friday, 1 March
  • Submission of final papers: Friday, 15 March

Registration

  • Regular delegate tickets – £150 per person
  • PhD candidates – Reduced fee of £50 upon approval of student status
  • Registration deadline: Friday, 15 March

To Register

Key dates

Conference: 8 – 9 April (Monday – Tuesday)

Closing deadline for submission: Wednesday, 20 February

Applicants notified by Friday, 1 March

Registration deadline and submission of final papers: Friday, 15 March

2019 Symposium on Economic Experiments in Developing Countries (SEEDEC)

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The Center for Effective Global Action (CEGA) and the Experimental Social Science Laboratory (Xlab) are excited to host the 2019 Symposium on Economic Experiments in Developing Countries (SEEDEC) at UC Berkeley on Thursday, May 30th and Friday, May 31st. SEEDEC, now in its eighth year, brings together a community of scholars who employ laboratory experimental economics methods for research in developing countries. Learn about past events here.

This year’s Symposium will feature keynote addresses by Stefano DellaVigna (UC Berkeley) and Pam Jakiela (University of Maryland).

Call for Papers

We invite submissions of papers involving economic lab experiments in low- and middle-income countries, or with clear lessons for LMICs (this does not include field-based randomized controlled trials). Please submit your full paper and supporting materials (optional) using this form no later than March 1st, 2019 at 11:59 PM PT. Successful applicants will be notified by March 31st, 2019.

Submissions will be evaluated based on the quality and novelty of the paper as well as balance across institutions and genders. Though not a formal requirement, preference will be given to papers employing research transparency and reproducibility tools and methods including pre-registration, pre-analysis plans, and open data, materials and code. Authors may provide these details using the online form below, or use the comments section to disclose if some or all of their data or materials cannot be shared for legal or ethical reasons.

Travel and Accommodation

Participants are expected to cover their own travel and accommodation. Visit this link for a list of accommodations close to campus. Breakfast and lunch will be provided on both days.

RSVP

This event is free and open to the public. Please RSVP here to attend.

Contact

Please contact Aleks Bogdanoski () with questions about this Call for Papers.

(When) Do Anti-poverty Programs Reduce Violence? India’s Rural Employment Guarantee and Maoist Conflict

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Aditya Dasgupta (University of California, Merced), Kishore Gawande (University of Texas, Austin), and Devesh Kapur (Johns Hopkins University – SAIS)

More than half of all nations have experienced a violent civil conflict since 1960.[1] One of the best predictors of conflict outbreak in a country is a low level of economic development and whether it has experienced a civil conflict in the past, suggesting the existence of “conflict trap” in which poverty and violence reinforce one another over time. This begs the question: how do nations break out of the vicious cycle of poverty and violence?

Poverty encourages participation in armed civil conflict in at least two ways. First, it creates economic and political grievances among impoverished groups, providing fertile ground for rebel groups to draw support from those who feel neglected by the state. Second, a lack of employment opportunities and stable livelihoods reduces the opportunity costs of participating in violent conflict, making it easier for rebel groups to recruit fighters.

If poverty fuels violence, then anti-poverty programs ought to play an important role in pacifying violent civil conflict. A large and growing scholarly literature has examined this policy implication, coming to surprisingly mixed conclusions. One randomized study of Afghanistan’s largest development program finds that the program contributed to a modest reduction in violence.[2] Another important randomized study in Liberia found that a combination of cash payments and therapy produced a durable reduction of participation in crime and violence among at-risk young men.[3] Other studies, especially those that examine the roll-out of large-scale government programs and not pilot experiments, have found that foreign aid and development programs are sometimes associated with increases in violence.[4]

How do we reconcile the conflicting evidence, especially the disjuncture between micro-level randomized studies by researchers and the program evaluation literature? We argue that state capacity, or the bureaucratic capacity of a government to successfully implement programs, may play an important role in actuating the pacifying effects of anti-poverty programs. In conditions of low state capacity, program funds are unlikely to pass through to local populations and corruption may even reinforce local grievances with the state and provide opportunities for rebel financing. When local state capacity is strong, however, antipoverty programs have a better chance of actually reducing poverty, improving perceptions of the state, and dis-incentivizing participation in deadly conflict.

To examine this hypothesis, we empirically examine how the roll-out of India’s National Rural Employment Guarantee Scheme (NREGS), a large-scale anti-poverty program which guarantees every rural household in India up to 100 days of public works employment, affected the intensity of the Maoist conflict, a protracted conflict between a Maoist insurgency concentrated in eastern India and the Indian government. Because the roll-out of NREGS was staggered in three phases between 2006 and 2008, we can employ a difference in differences research design. If NREGS reduced violence, we should observe a reduction in violence in districts adopting the program relative to districts experiencing no change in their program adoption status. Moreover, if these pacifying effects depended on state capacity, we should observe that these effects are mainly concentrated in districts with a high level of state capacity, which varies quite substantially across regions and districts of India.

To measure the intensity of the Maoist conflict, we assemble a new panel dataset of violent incidents and deaths at the district level, drawing on the archives of local language newspapers, which ensures that we get adequate temporal and spatial coverage of a long-simmering conflict that occurs mainly in rural areas; existing datasets that draw exclusively on English language sources are heavily biased toward more recent conflict events and those that are close to urban areas. To measure district-level state capacity, we average the ranking of districts across four indicators of basic service provision according to the 2001 census based on the share of villages with: (1) a paved road; (2) a primary school; (3) a primary health center; and (4) an agricultural credit cooperative (the lowest tier of the Indian government’s agricultural credit network).

Using these data, we come to two main findings. First, overall the adoption of NREGS was associated with a large reduction violent incidents and deaths, especially over the long run. To provide a back-of-the-envelope calculation of the size of the pacifying effects, consider the total levels of violence observed in 2008: 619 violent incidents resulting in 751 deaths. According to our regression estimates, counter-factually without the adoption of NREGS across districts, levels of total violence would have been 1,440 violent incidents resulting in 2,030 deaths suggesting that the program eliminated roughly 821 potential violent incidents and 1,279 casualties across districts in that year.

Second, these effects were concentrated in districts with high levels of state capacity. Our analysis of heterogeneous effects suggests that the violence-reducing effects of NREGS were concentrated almost entirely in the top two quartiles of districts in terms of state capacity. In the districts in the bottom two quartiles of state capacity, the program had essentially no impact on violence at all.

What conclusions do we draw? First, NREGS has probably played an important role in the long-term pacification of the Maoist conflict in India. Second, one reason for the mixed evidence from the program evaluation literature on the impact of development programs on violence is that the pacifying effects of anti-poverty programs depend heavily on state capacity, which can vary considerably across and within countries. Indeed, other recent studies have come to similar conclusions – that development programs can reduce violence, but primarily in areas where the state possesses a monopoly of violence and has the capacity to carry out its developmental activities without rebel subversion.[5]

To reduce violence, therefore, policymakers need to encourage not only development through anti-poverty programs, but also the strengthening of bureaucratic and state capacity.

References

Beath, A., F. Christia, and R. Enikolopov, (2013); “Winning Hearts and Minds Through Development: Evidence from a Field Experiment in Afghanistan.” Paper presented at the 110th Annual Meeting of the American Political Science Association, August, Chicago.

Blattman, C., J.C. Jamison, and M. Sheridan, (2017); “Reducing Crime and Violence: Experimental Evidence from Cognitive Behavioral Therapy in Liberia.” American Economic Review 107(4): 1165-1206.

Blattman, C., and E. Miguel, (2010); “Civil war.” Journal of Economic Literature 48(1): 3-57.

Crost, B., J. Felter, and P. Johnston, (2014); “Aid Under Fire: Development Projects and Civil Conflict.” American Economic Review 104(6): 1833-56.

Sexton, R., (2016); “Aid as a Tool Against Insurgency: Evidence from Contested and Controlled Territory in Afghanistan.” American Political Science Review 110(4): 731-749.

Endnotes

[1] Blattman and Miguel (2010).

[2] Beath, Christia, and Enikolopov (2013).

[3] Blattman, Jamison, and Sheridan (2017).

[4] Crost, Felter, and Johnston (2014).

[5] Sexton (2016).

 

Sidney Meyer Chair in International Economics

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The Department of Economics at Grinnell College invites applications to the Sidney Meyer Chair in International Economics beginning Fall 2019. The appointment will preferably be made at the rank of Professor; Associate Professor possible. We will consider promising individuals from both academic and non-academic institutions who have documented teaching experience. The position involves a teaching load of three courses per year and the expectation of research in international economics. Research and teaching interests in all areas of international economics will be considered. Adjacent specialities such as economic development, international relations and political economy, economic impacts of globalization, and comparative economic systems may also be considered.

In letters of application, candidates should discuss their potential to contribute to a college community that maintains a diversity of people and perspectives as one of its core values. To be assured of full consideration, all application materials should be received by December 1, 2018. Please visit our application website at https://jobs.grinnell.edu to find more details about the job and submit applications online. Candidates will need to upload a letter of application, curriculum vitae, transcripts (copies acceptable), and provide email addresses for three references. Questions should be directed to Professor William Ferguson at EconSearch@grinnell.edu or ++1-641-269-3173.

  • Application deadline: 12/01/2018
Reference Instructions:
Candidates will provide email addresses for three references when submitting their application. Referees will receive an email from Grinnell College with instructions for uploading letters of recommendation.

Apply for this job (link)

Assistant / Associate Professor in Applied Microeconomics

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IESEG School of Management

IÉSEG School of Management invites applications for one full-time position in Empirical Microeconomics at the Assistant or Associate Professor level starting in September 2019. The selected candidate will be based at the IÉSEG campus in Paris, and work in close collaboration with a research team specializing in labour, migration and family economics as well as firm level analysis.

ABOUT IÉSEG SCHOOL OF MANAGEMENT

  • IÉSEG is AACSB, EQUIS and AMBA accredited and is a member of the “Conférence des Grandes Écoles.”
  • The IÉSEG Research Center is accredited by the French National Council for Scientific Research (CNRS).
  • IÉSEG’s faculty is very diverse with more than 40 different nationalities represented.
  • IÉSEG offers Bachelor’s, Master’s, and Specialized Master’s degrees, as well as Executive Education programs.

IÉSEG has campuses in Lille and Paris.  The Lille Campus is in the heart of the city and the Paris Campus is located in Europe’s biggest business district of “La Défense.” More information about the School can be found at http://www.ieseg.fr/en

JOB QUALIFICATIONS

The candidate is expected to possess effective teaching skills and willingness to teach courses in quantitative methods, as well as have a strong commitment to research excellence. In line with IÉSEG’s philosophy, he/she should also display a high level of team spirit. The successful candidate will conduct research, teach at undergraduate and postgraduate levels and also contribute to the design and development of the Department’s programs.

Applicants for the position of Assistant Professor should hold a PhD or be very close to its completion and have the potential to conduct high-quality research. Applicants for the position of Associate Professor should possess a PhD and be able to provide significant evidence of publications in reputable academic journals.

Applicants should be completely fluent in English as all courses will be taught in this language. Prior knowledge of French is not required.

BENEFITS

Housing search assistance is provided by IÉSEG. Employees receive French social security benefits, complementary health insurance, and a contributory pension scheme. The School also provides French language tutoring to its faculty members.

APPLICATION PROCEDURE

Interested applicants need to fill out the application form available at http://ieseg.az1.qualtrics.com/jfe/form/SV_5BI3hf7utcGLlit  and upload their application package, consisting  of the cover letter, curriculum vitae (mentioning the names, affiliations, and email addresses of three referees), research statement, teaching statement, and teaching evaluations for the past year, merged into a single PDF document bearing the applicant’s name and the reference code “ECO19” reserved for this opening.

For any further question, please contact us by e-mail at

CLOSING DATE FOR THE RECEIPT OF APPLICATIONS: DECEMBER 19, 2018.

APPLICATIONS WILL BE REVIEWED UPON RECEIPT AND WILL CONTINUE UNTIL THE POSITION IS FILLED. PLEASE QUOTE REFERENCE: ECO19

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