SECURITY IS LIKE OXYGEN: EVIDENCE FROM UGANDA

Since the early 1990s, Uganda has been one of Africa's fastest growing countries. However, at the sub-national level, growth has been uneven due to civil conflict in the northern region. Using a panel of household and community level data, this paper examines the links between security and economic growth. It is found that security is a pre-condition for successful economic development and that there is in fact a threshold level of security below which public investments in infrastructure and education have little impact on growth. Only when security exceeds this threshold do public investments stimulate economic growth. Economists and policy advisors living in peaceful countries often prescribe economic policies that hinge on the assumption of good security. In this manner, security, like oxygen, is taken for granted.Institutional and Behavioral Economics,

Security is like oxygen

"Since the early 1990s, Uganda has been one of Africa's fastest growing countries. However, at the sub-national level, growth has been uneven due to civil conflict in the northern region. Using a panel of household and community level data, this paper examines the links between security and economic growth. It is found that security is a pre-condition for successful economic development and that there is in fact a threshold level of security below which public investments in infrastructure and education have little impact on growth. Only when security exceeds this threshold do public investments stimulate economic growth. Economists and policy advisors living in peaceful countries often prescribe economic policies that hinge on the assumption of good security. In this manner, security, like oxygen, is taken for granted." Authors' AbstractConflict ,

Asymmetric property rights in China's economic growth:

"This paper highlights the difference between secure investor property rights and loosely defined individual property rights. Globalization and fiscal decentralization have intensified this difference. On the one hand, in the presence of mobile foreign direct investments and under the arrangement of fiscal decentralization, local governments compete vigorously to offer various protections on the property rights of investors; on the other hand, local governments and developers attempt to acquire land at as low price as possible by taking advantage of the loopholes inherent in the Chinese law. Secure investor property rights together with weak protections on individuals' land property rights is argued to be one of the major drivers of China's rapid economic growth. But the same factor can veer those individuals being deprived of land into violence and social unrest, which may undermine China's social stability and long-term sustainable growth." from Authors' AbstractProperty rights, Investments, economic growth, China, individual land property, Fiscal policies, Decentralization,

Fiscal Decentralization and Political Centralization in China: Implications for Growth and Inequality

Chinese economy, growth, fiscal decentralization, regional inequality

“Made in China”: Crisis begets quality upgrade

The quality of manufactured products made in China has improved tremendously in the past several decades. In this paper, we argue that crises are instruments for the upgrade of Chinese manufactured goods. We first develop a theoretical framework to show that a crisis, if used wisely, could present good opportunities for entrepreneurs and local governments to form collective action to improve product quality. Next, we empirically test the hypothesis using a panel data set from 1990 to 2008 covering more than 100 clusters in the Zhejiang Province of China.Cluster, crisis, manufacturing industry, quality upgrade,

Overcoming successive bottlenecks: The evolution of a potato cluster in China

Although the role of industrial policy in economic development is a frequent topic of debate in both the literature and the political arena, most such discussions focus on industrial policymaking at the national level. Using a case study of a potato cluster in China, we show that industrial policymaking at the local level contributes greatly to economic development. Many of the industrial policies affecting the cluster—including leveling land, developing better varieties, establishing a potato trade association, lobbying for increasing freight car quotas, and attracting processing firms—were implemented at the local level, highlighting the need for discussion of local industrial policymaking as a major determinant of cluster development. As the case study demonstrates, economic development is a continuous process with constantly evolving binding supply-side and demand-side constraints. Often, after a local policy helps remove one binding constraint, a new one emerges that, in turn, may require a new set of local policies. Therefore, the success of a potato cluster depends upon local industrial policies that respond to emerging binding constraints at different stages of the cluster's development.Economic transformation, clusters, comparative advantage, local industrial policy, Poverty,

How productive is infrastructure?: new approach and evidence from rural India

There have been competing arguments about the effect of public infrastructure on productivity in the literature. Level-based regressions generally show a much higher return to public capital than private capital, while difference-based regressions tend to find insignificant or even negative effects. To help reconcile this debate, this paper proposes that researchers should first test for causality in their data to check for length of lagged relationships and the existence of reverse causality, as a critical step before specifying a final model and estimating procedure on the relationship between the stock of capital and productivity growth. A newly developed system GMM method of estimation is proposed for this purpose. Second, a new method of estimating the relationship between the capital stock and productivity in level form is proposed that controls for possible endogeneity problems arising from reverse causation. These methods are illustrated using a unique set of pooled time-series, cross-section data for India. It is shown that infrastructure development in India is productive with an estimated impact lying between those obtained from level-based and difference-based estimates.Public administration India., Infrastructure (Economics) India. ,

Credit constraints, organizational choice, and returns to capital: Evidence from a rural industrial cluster in China

"Traditional economic theory posits that a well-functioning capital market is a necessary condition for industrialization and economic growth. In reality, micro and small enterprises are ubiquitous because entrepreneurs can undertake low-return activities with minimal barriers to entry. Using a cashmere sweater cluster in China as an example, this paper shows that organizational choice can overcome the prohibitive cost of investment. When facing credit constraints, firms are more likely to concentrate in divisible production technologies in the form of industrial clusters. Within clusters, a vertically-integrated production process can be decomposed into many small incremental stages that are more accessible for the small entrepreneurs widely available in rural China, thereby supporting industrialization even in the absence of a well-functioning capital market. The observed rate of returns to capital is closely related to the organizational choice under credit constraints." from authors' abstractIndustrialization, Entrepreneurship, Credit, Capital markets, organizational choice, Non-farm development,

The role of elected and appointed village leaders in the allocation of public resources: Evidence from a low-income region in China

appointed leader, election, Public goods,

Do geese migrate domestically?: Evidence from the Chinese textile and apparel industry

The vast majority of empirical literature on “flying geese” examines industrial relocation across national boundaries, in particular in Asia. However, few studies have empirically tested whether this kind of “flying geese” pattern of industrial relocation has occurred domestically in a large country, provided that the regional difference is large enough. Using textile and apparel industry data for the period 1997–2008 in China, the paper shows that until 2004, the textile and apparel industry was still concentrated in the eastern region of China, but starting in 2005, the flying geese phenomenon of industrial relocation began to appear.industrial relocation, flying geese hypothesis, textile and apparel industry, labor-intensive industries,