Social Costs of Mass Privatization

According to leading economic theorists, creating capitalism out of communism requires rapid privatization. In this article we empirically test the welfare implications of privatization policies in Post-Soviet countries by using cross-national panel mortality data as an indicator of social costs. We find that rapid privatization ñ whether measured by a novel measure of mass privatization program implementation or Enterprise Bank for Reconstruction and Development privatization outcome scores ñ is a critical determinant of life expectancy losses, and that when privatization policies are reversed, life expectancy improves. Using selection models, we show that endogeneity understates the social costs of rapid privatization.http://deepblue.lib.umich.edu/bitstream/2027.42/64393/1/wp890.pd

Six concerns about the data in aid debates: applying an epidemiological perspective to the analysis of aid effectiveness in health and development.

Is aid helping, hindering, or having no effect on development and health? The answer to this question is highly contested, with proponents on all sides adhering strongly to their competing interpretations. We ask how it is possible for those who are often using the same data to hold such divergent views. Here, we employ an epidemiological perspective and find that, in many cases, the arguments are characterised by methodological weaknesses. There may be selective citation of results and failure to account for bias and confounding, such as where an extraneous factor influencing the outcome is correlated with increased aid or, in confounding by indication, where increased aid is a consequence of a country being in an especially adverse situation. Studies may also lack external validity, whereby lack of data (a widespread problem) or similar considerations mean that analyses are undertaken on an unrepresentative subset of countries. Multiple outcome measures can also be problematic, where the main outcome of interest is not specified in advance. Many studies fail to account for differential time lags between changes in aid and the outcomes being studied. Some studies may also be underpowered to detect an association where one exists. Although, ideally, this debate should be informed by large scale randomised controlled trials, this will often be unfeasible. Given this limitation, it is essential that those engaged in it are cognisant of the many methodological issues that face any observational study

Social Costs of Mass Privatization

According to leading economic theorists, creating capitalism out of communism requires rapid privatization. In this article we empirically test the welfare implications of privatization policies in Post-Soviet countries by using cross-national panel mortality data as an indicator of social costs. We find that rapid privatization – whether measured by a novel measure of mass privatization program implementation or Enterprise Bank for Reconstruction and Development privatization outcome scores – is a critical determinant of life expectancy losses, and that when privatization policies are reversed, life expectancy improves. Using selection models, we show that endogeneity understates the social costs of rapid privatization.privatization, postcommunist, mortality crisis

Mass Privatization and the Postcommunist Mortality Crisis

During the transition to capitalism, postcommunist countries have experienced unprecedented mortality crises, although there has been considerable variation within — and between — countries and regions. Much of this variation remains unexplained, although alcohol and psychological stress have been found to be major causes of declining life expectancy. We move beyond this finding by showing that the implementation of neoliberal-inspired rapid large-scale privatization programs (mass privatization) was a major determinant of the decline in life expectancy. We find that mass privatization also increased alcohol-related deaths, heart disease, and suicide rates, strong evidence that mass privatization created psychosocial stress that directly resulted in higher mortality. We also find that mass privatization modestly contributed to a decline in the number of physicians, dentists, and hospital beds per capita; however, we find only very weak evidence that this reduction in health resources directly contributed to the mortality crisis itself. By using “control function” and instrumental variable approaches to account for the potential endogeneity of mass privatization, we also demonstrate that the choice of mass privatization as a property-reform strategy was not economically determined, but was rather caused by ethnic politics and the mimicking of policies adopted by powerful neighboring countries.postcommunist, mortality crisis, privatization, psychosocial stress

Foreign Currency Debt, Financial Crises and Economic Growth: A Long Run View

Foreign currency debt is widely believed to increase risks of financial crisis, especially after being implicated as a cause of the East Asian crisis in the late 1990s. In this paper, we study the effects of foreign currency debt on currency and debt crises and its indirect effects on short-term growth and long-run output effects in both 1880-1913 and 1973-2003 for 45 countries. Greater ratios of foreign currency debt to total debt is associated with increased risks of currency and debt crises, although the strength of the association depends crucially on the size of a country’s reserve base and its policy credibility. We found that financial crises, driven by exposure to foreign currency, resulted in significant permanent output losses. We estimate some implications of our findings for the risks posed by currently high levels of foreign currency liabilities in eastern Europe.foreign currency debt, currency crises, sudden stops, financial development

Nutritional determinants of worldwide diabetes: an econometric study of food markets and diabetes prevalence in 173 countries.

OBJECTIVE: Ageing and urbanization leading to sedentary lifestyles have been the major explanations proposed for a dramatic rise in diabetes worldwide and have been the variables used to predict future diabetes rates. However, a transition to Western diets has been suggested as an alternative driver. We sought to determine what socio-economic and dietary factors are the most significant population-level contributors to diabetes prevalence rates internationally. DESIGN: Multivariate regression models were used to study how market sizes of major food products (sugars, cereals, vegetable oils, meats, total joules) corresponded to diabetes prevalence, incorporating lagged and cumulative effects. The underlying social determinants of food market sizes and diabetes prevalence rates were also studied, including ageing, income, urbanization, overweight prevalence and imports of foodstuffs. SETTING: Data were obtained from 173 countries. SUBJECTS: Population-based survey recipients were the basis for diabetes prevalence and food market data. RESULTS: We found that increased income tends to increase overall food market size among low- and middle-income countries, but the level of food importation significantly shifts the content of markets such that a greater proportion of available joules is composed of sugar and related sweeteners. Sugar exposure statistically explained why urbanization and income have been correlated with diabetes rates. CONCLUSIONS: Current diabetes projection methods may estimate future diabetes rates poorly if they fail to incorporate the impact of nutritional factors. Imported sugars deserve further investigation as a potential population-level driver of global diabetes

The Social Construction of Successful Market Reforms

The transition from socialism to capitalism has spawned a large literature on comparative policy reforms. While many sociologists using qualitative data have concluded that neo-liberal reforms led to negative outcomes, a large body of cross-national literature, mostly from economics and political science, claims that more neo-liberal reforms produced better economic and political outcomes. These latter studies almost all use measures of policy reform constructed by economists at the European Bank for Reconstruction and Development (EBRD). We show, using the EBRD’s own data, that their indices of progress in market reforms are biased in the direction of positive growth. That is, the EBRD’s bureaucracy over-codes the more successful countries. When one accounts for this bias, the relationship between the EBRD’s transition indicators and growth significantly weakens or disappears. These findings have implications for social scientific research using statistics constructed by �international organizations, like the World Bank and the IMF.sociology of knowledge, transition, bias

The Governance Grenade: Mass Privatization, State Capacity and Economic Growth in Post-communist Countries

Why did the transitions from state socialism to capitalism result in improved growth in some countries but significant economic declines in others? Three main arguments have been advanced: (1) the most successful countries rapidly implemented privatization, liberalization, and stabilization policies; (2) failures were unrelated to economic policies but occurred because of a poor institutional environment; and (3) the policies were counterproductive because they damaged the state. We present a state-centered theory which argues that the more radical the privatization program, the worse the subsequent performance. We agree with the second account, that institutions matter, but demonstrate that it was radical privatization itself which was a major determinant of institutional weakness. In addition, our account holds that privatization was in fact a crucial determinant of institutional failure, operating primarily through the creation of a massive shock to state revenues. We perform cross-national regressions for a sample of 30 countries between 1990 and 2000, and find that mass privatization programs negatively impacted economic growth, state capacity and property rights protection. These findings are corroborated with data from a random sample of 4,000 firms from 26 post-communist countries. We show that in countries which implemented sizable mass-privatized programs, privatized firms were substantially less likely to engage in successful industrial restructuring but considerably more likely to engage in barter and have tax arrears than their state owned counterparts.