Search

How do political institutions affect economic crises? And, how much does poverty react to changes in average income and distribution? This dissertation answers these questions in two parts. Part one shows that negative regime changes affect the probability of economic crises, and outlines a theory illustrating how the duration of economic declines depends on the strength of political institutions and ethnic heterogeneity. Part two looks at growth, distribution and poverty. It illustrates a new empirical framework for analyzing the speed of poverty reduction and applies this framework to study an important policy question, namely: will extreme poverty end by 2030? It shows that the pace of poverty reduction will slow down. An optimistic scenario suggests a poverty rate of 8-9 per cent, far short of the World Bank’s new 3 per cent target.

Last year saw the 20th anniversary edition of JECP, and in the introduction to the philosophy section of that landmark edition, we posed the question: apart from ethics, what is the role of philosophy ‘at the bedside'? The purpose of this question was not to downplay the significance of ethics to clinical practice. Rather, we raised it as part of a broader argument to the effect that ethical questions – about what we should do in any given situation – are embedded within whole understandings of the situation, inseparable from our beliefs about what is the case (metaphysics), what it is that we feel we can claim to know (epistemology), as well as the meaning we ascribe to different aspects of the situation or to our perception of it. Philosophy concerns fundamental questions: it is a discipline requiring us to examine the underlying assumptions we bring with us to our thinking about practical problems. Traditional academic philosophers divide their discipline into distinct areas that typically include logic: questions about meaning, truth and validity; ontology: questions about the nature of reality, what exists; epistemology: concerning knowledge; and ethics: how we should live and practice, the nature of value. Any credible attempt to analyse clinical reasoning will require us to think carefully about these types of question and the relationships between them, as they influence our thinking about specific situations and problems. So, the answers to the question we posed, about the role of philosophy at the bedside, are numerous and diverse, and that diversity is illustrated in the contributions to this thematic edition.

This paper analyzes the duration of large economic declines and provides a theory of delayed recovery. First, we develop a formal political economy model that illustrates a simple mechanism of how weak constraints on the political executive can lead to longer declines in ethnically heterogeneous countries. The model shows how uncertain post-recovery incomes and a winner-take-all threshold effect create a commitment problem rendering a cooperative equilibrium inaccessible. Holding out can benefit groups by reducing the threshold effects in subsequent periods, thus limiting the remaining uncertainty. Placing strong constraints on the executive solves this commitment problem by reducing the uncertainty from the threshold effects, which brings about cooperation earlier on. Second, we then test several empirical predictions from the model using standard data on linguistic heterogeneity and more detailed data on ethnic power configurations. We find that the partial correlations are consistent with the proposed theory. The effect of executive constraints on the length of declines is very large in heterogeneous countries, but practically disappears in ethnically homogeneous societies. The adverse effect of heterogeneity is driven by the number of groups; increasing political concentration works in the opposite direction.

This working paper is part of the research programme on Institutions, Governance and Longterm Economic Growth, a partnership between the French Development Agency AFD and the Maastricht Graduate School of Governance Maastricht University UNUMerit. The research builds on the Institutional Profiles Database IPD, jointly developed by AFD and the French Ministry of the Economy since 2001.

No abstract.