Institutions and economics

Democracy inhibits ethnic favouritism

Ameet Morjaria, 5 February 2014

Ethnic favouritism is a longstanding problem in Africa. This column presents new evidence of this phenomenon and how democracy affects it. Data on road building in Kenya confirms strong ethnic favouritism that disappears during periods of democracy.

What drives protests in Ukraine?

Nauro F Campos, 22 December 2013

Mass political protests are erupting in Ukraine. The conventional wisdom views them as driven by popular dissatisfaction with the government’s rejection of the EU agreement. This column argues that the main cause for the protests is the weak institutional framework that emerged after the collapse of communism. Therefore, a potential EU involvement will be most beneficial in providing a stable institutional setting. Utilising this historical moment is important in order for Ukraine to avoid the example of Argentina.

Management quality and the gains from trade

Cheng Chen, 15 December 2013

Management quality varies enormously across nations and these differences are associated with important outcomes such as firm-size distribution and aggregate productivity. Such facts, however, cannot be understood using existing trade theory. This JMP Vox column describes a new general equilibrium framework linking management technology, firms’ hierarchy choices, and international trade. Heightened import competition induces firms to flatten their hierarchies and rely more on incentive-based pay. Better management is also complementary with trade liberalisation, since nations with superior management technology experience larger gains from trade.

Managing bureaucrats

Imran Rasul, Daniel Rogger, 19 November 2013

Around the world, civil service reform is viewed as necessary to deliver public services effectively and to foster development. However, evidence is thin on how the management of bureaucrats affects the provision of public services. This column presents new evidence from Nigeria linking completion rates of government projects to bureaucractic management practices. Greater autonomy is associated with higher completion rates, whereas performance monitoring and incentive schemes seem to backfire. The most effective private-sector management practices may not be suited to public sector bureaucracies.

Reduced uncertainty and Japan

Masayuki Morikawa, 2 November 2013

Reduced policy uncertainty can contribute to a country’s economic growth. This column highlights the negative influence of policy uncertainty and political instability on the growth of Japan. A survey shows that international trade and tax polices pose the greatest uncertainty on Japanese companies. The column concludes with a discussion of the mechanism via which uncertainty affects corporate behavior.

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