False Prophet, or Genuine Savior? Assessing the Effects of Economic Openness on Sustainable Development, 1980–1999

While many herald globalization—the increasing interconnectedness of national economies—to be associated with rising standards of living across the globe, many others fear its effects on sustainability. Anti- globalization forces and environmentalists in particular view these developments as a threat to the welfare of future generations because of profligate and excessive current consumption. This study is the first to estimate the effects of dependence on trade, foreign direct investment (FDI), and an index of economic freedom on the World Bank’s measure of sustainability (the genuine savings rate), which measures the rate at which investment in the total stock of manufactured, human, and natural capital exceeds its depreciation. Contrary to pessimists’ fears, our indicators of economic openness show positive effects on sustainability, results that are robust to sample size, testing procedure, and several alternative specifications. The results support those who suggest that distorted economies tend to be both inefficient and damaging to future generations. If increasing trade, foreign direct investment, and economic freedom are hallmarks of globalization, then worries about its effects on future well-being are misplaced.

Disarming fears of diversity : ethnic heterogeneity and state militarization, 1988-2002

The authors address the question of state militarization under conditions of ethnic and other diversity."Primordialist"claims about ancient hatreds, fear, and insecurity in such societies would lead one to expect that fractionalization, polarization, and ethno-nationalist exclusion would prompt governments to militarize heavily. But contrary to such expectations, the authors find that higher levels of ethnic diversity predict lower levels of militarization, whereas higher polarization and ethno-nationalist exclusion trigger neither lower nor higher levels of militarization. If fractionalization lowers the hazard of civil war, as many find, then it does not happen by way of a"garrison state"effect. The authors discuss two potential explanations for their findings, one drawing from the empirical conflict literature, the other stemming from economists'study of public goods provision under conditions of diversity. They argue that their findings are best seen as consistent with and complementary to the empirical literature on conflict onset and duration.Peace&Peacekeeping,Population Policies,Social Conflict and Violence,Post Conflict Reintegration,Inequality

Disarming Fears of Diversity: Ethnic Heterogeneity and State Militarization, 1988–2002

This study addresses state militarization under conditions of ethnic and other diversity. Recent scholarship in economics finds that high diversity leads to lower provision of public goods. At the same time, conflict studies find that highly diverse societies face a lower risk of civil war despite the ‘primordialist’ claims about ancient hatreds, fear, and insecurity in such societies. Investigating possible links between these two separate lines of research, we explore whether diversity prompts governments to militarize heavily in order to prevent armed conflict, which would then crowd out spending on other public goods. Using military expenditures, personnel and arms imports as indicators of militarization, we find that higher levels of ethnic (and possibly linguistic) diversity predict lower levels of militarization, whereas religious diversity does not matter. If high diversity lowers the hazard of civil war, then it does not happen via a ‘garrison state’ effect. If diverse societies spend less on public goods, then this is not because they are crowded out by costly militarization.

Globalization, Women’s Economic Rights and Forced Labor

Globalization critics are concerned that increased trade openness and foreign direct investment exacerbate existing economic disadvantages of women and foster conditions for forced labor. Defenders of globalization argue instead that as countries become more open and competition intensifies, discrimination against any group, including women, becomes more difficult to sustain and is therefore likely to recede. The same is argued with respect to forced labor. This article puts these competing claims to an empirical test. We find that countries that are more open to trade provide better economic rights to women and have a lower incidence of forced labor. This effect holds in a global sample as well as in a developing country sub-sample and holds also when potential feedback effects are controlled via instrumental variable regression. The extent of an economy’s ‘penetration’ by foreign direct investment has no statistically significant impact. Globalization might weaken the general bargaining position of labor such that outcome-related labor standards might suffer. However, being more open toward trade is likely to promote rather than hinder the realization of two labor rights considered as core or fundamental by the International Labour Organization, namely the elimination of economic discrimination and of forced labor.

Corruption, the Resource Curse and Genuine Saving

Genuine saving is an established indicator of weak sustainable development that measures the net level of investment a country makes in produced, natural and human capital less depreciation. Maintaining this net level of investment above zero is a necessary condition for sustainable development. However, data demonstrate that resource-rich countries are systematically failing to make this investment. Alongside the familiar resource curse on economic growth, resource abundance has a negative effect on genuine saving. In fact, the two are closely related insofar as future consumption growth is restricted by insufficient genuine saving now. In this paper, we apply the most convincing conclusion from the literature on economic growth - that it is institutional failure that depresses growth - to data on genuine saving. We regress genuine saving on four indicators of institutional quality in interaction with an indicator of resource abundance. The indicators of institutional quality are corruption, bureaucratic quality, the rule of law and political constraints on the executive. We find that reducing corruption has a positive impact on genuine savings that is robust across different estimation procedures.weak sustainability, corruption, institutional quality, resources, curse

Free to Squander? Democracy, Institutional Design, and Economic Sustainability, 1975–2000

While democracy’s effect on economic growth has come under intense empirical scrutiny, its effect on economic sustainability has been noticeably neglected. We assess the effects of regime type and democratic institutional design on economic, or “weak” sustainability. Sustainability requires that stocks of capital do not depreciate in value over time. The World Bank gauges the rate of net investment in manufactured, human, and natural capital, a unified indicator of weak sustainability (the genuine savings rate). All four indicators of democracy we examine show that freer societies have higher genuine savings rates because they invest more in human capital, create less CO2 damage, and extract fewer natural resources per economic unit produced, even if they show lower net investment in manufactured capital. Democracies may trade off immediate material welfare gains for future pay-offs. This finding justifies why scholars should assess the effects of regime type on more than just immediate growth or the rate of change of manufactured capital. Among democracies, we find that pure parliamentary systems spend more on education than do presidential ones, but exhibit no statistically significant difference for the overall genuine savings rate. Proportional representation electoral systems fare worse than plurality when it comes to genuine and net national savings, even though they do better on education spending. The results taken together show that differences in regime type and democratic institutional design allow for different trade-offs. The results are robust to a range of specifications and a developing country only sub- sample.

Corruption, the resource curse and genuine saving.

Genuine saving measures net investment in produced, natural and human capital. It is a necessary condition for weak sustainable development that genuine saving not be persistently negative. However, according to data provided by the World Bank, resource-rich countries are systematically failing to meet this condition. Alongside the well-known resource curse on economic growth, resource abundance might have a negative effect on genuine saving. In fact, the two are closely related, as future consumption growth is limited by insufficient genuine saving now. In this paper, we apply the most convincing conclusion from the literature on economic growth – that it is institutional failure that depresses growth – to data on genuine saving. We regress gross and genuine saving on three indicators of institutional quality in interaction with an indicator of resource abundance. The indicators of institutional quality are corruption, bureaucratic quality and the rule of law. We find that reducing corruption has a positive impact on genuine saving in interaction with resource abundance. That is, the negative effect of resource abundance on genuine saving is reduced as corruption is reduced.

Can bigger health budgets cushion pandemics? An empirical test of COVID-19 deaths across the world

How has public healthcare spending prepared countries for tackling the COVID-19 pandemic? Arguably, spending is the primary policy tool of governments for providing effective health. We argue that the effectiveness of spending for reducing COVID deaths is conditional on the existence of healthcare equity and lower political corruption because the health sector is particularly susceptible to political spending. Our results, obtained using ordinary least squares and two-stage least squares estimations, suggest that higher spending targeted at reducing inequitable access to health has reduced COVID deaths. Consistent with the findings of others, our results indirectly suggest that health spending is necessary, but not sufficient unless accompanied by good governance and equitable access. Equitable health systems ease the effects of COVID presumably because they allow states to reach and treat people more effectively. Spending aimed at increasing health system capacity by increasing access thus seems a sound strategy for fighting the spread of disease, ultimately benefiting us all

Health-system equity, egalitarian democracy and COVID-19 outcomes: an empirical analysis

Aims: The COVID-19 pandemic has led to a spate of studies showing a close connection between inequitable access to health care, welfare services and adverse outcomes from the pandemic. Others have argued that democratic governments have generally failed relative to more autocratic ones, simply because autocrats can make the hard choices required for stemming the spread of viruses. We address this question by asking whether more ‘egalitarian’ forms of democracy matter, given that they contain more equitable health-care access and societal infrastructure, such as social capital and trust. Methods: We use standard regression techniques, including instrumental variables analysis addressing endogeneity on COVID-19 testing and deaths data as of the end of May and beginning of September. We use novel data from the Varieties of Democracy Project on health-system equity and egalitarian democracy. Results: Our results suggest that more equitable access to health care increases testing rates and lowers the death rate from COVID-19. Broader egalitarian governance, measured as egalitarian democracy, however, shows the opposite effect. Thus, factors associated with health-care capacity to reach and treat matter more than broader societal factors associated with social capital and trust. The results are robust to alternative testing procedures, including instrumental variable technique for addressing potential endogeneity. Conclusions: Despite a great deal of public health focus on how equitable governance helps fight the adverse effects of so-called neoliberal pandemics, we find that broadly egalitarian factors have had the opposite effect on fighting COVID-19, especially when an equitable health system has been taken into account. Fighting disease, thus, might be more about the capacity of health systems rather than societal factors, such as trust in government and social capital

More heat, less light! The resource curse & HIV/AIDS: A reply to Olivier Sterck

We reported fairly robust results suggesting that resource rich countries did less well containing HIV/AIDS than resource poor states (de Soysa and Gizelis, 2013). We argued that public action to prevent the spread of disease was going to be weaker in resource rich states because rulers would have less incentive to fight disease. Olivier Sterck (this issue) criticizes our study on several grounds, arguing that resource rich states can provide anti-retroviral therapy (ART) and thereby fight the AIDS epidemic. He, however, finds no relationship between resource wealth and HIV/AIDS. We argue that his reanalyses do not fully address the theoretical association between resource wealth and the spread of HIV/AIDS and that his argument about ART is more wishful than a realistic expectation. Future research should probe more carefully why resource wealth has not been deployed more effectively for fighting disease-a point we can all agree on