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Public goods and ethnic divisions
TL;DR: In this paper, the authors present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public goods the city supplies, showing that the shares of spending on productive public goods - education, roads, sewers, and trash pickup - in U.S. cities (metro areas/urban counties) are inversely related to the city's ethnic fragmentation.
Abstract: The authors present a model that links heterogeneity of preferences across ethnic groups in a city to the amount and type of public good the city supplies. Results show that the shares of spending on productive public goods - education, roads, sewers, and trash pickup _ in U.S. cities (metro areas/urban counties) are inversely related to the city's (metro area's/county's) ethnic fragmentation, even after controlling for other socioeconomic and demographic determinants. They conclude that the ethnic conflict is an important determinant of local public finances. In cities where ethnic groups are polarized, and where politicians have ethnic constituencies, the share of spending that goes to public goods is low. Their results are driven mainly by how white-majority cities react to varying minority-groups sizes. Voters choose lower public goods when a significant fraction of tax revenues collected from one ethnic group is used to provide public goods shared with other ethnic groups.
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TL;DR: This article showed that ethnic diversity helps explain cross-country differences in public policies and other economic indicators in Sub-Saharan Africa, and that high ethnic fragmentation explains a significant part of most of these characteristics.
Abstract: Explaining cross-country differences in growth rates requires not only an understanding of the link between growth and public policies, but also an understanding of why countries choose different public policies. This paper shows that ethnic diversity helps explain cross-country differences in public policies and other economic indicators. In the case of Sub-Saharan Africa, economic growth is associated with low schooling, political instability, underdeveloped financial systems, distorted foreign exchange markets, high government deficits, and insufficient infrastructure. Africa's high ethnic fragmentation explains a significant part of most of these characteristics.
5,648 citations
TL;DR: The authors investigated empirically the determinants of the quality of governments in a large cross-section of countries and found that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French or socialist laws, or have high proportions of Catholics or Muslims exhibit inferior government performance.
Abstract: We investigate empirically the determinants of the quality of governments in a large cross-section of countries. We assess government performance using measures of government intervention, public sector efficiency, public good provision, size of government, and political freedom. We find that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French or socialist laws, or have high proportions of Catholics or Muslims exhibit inferior government performance. We also find that the larger governments tend to be the better performing ones. The importance of (reasonably) exogenous historical factors in explaining the variation in government performance across countries sheds light on the economic, political, and cultural theories of institutions.
5,555 citations
Posted Content•
TL;DR: Collier and Hoeffler as discussed by the authors compare two contrasting motivations for rebellion: greed and grievance, and show that many rebellions are linked to the capture of resources (such as diamonds in Angola and Sierra Leone, drugs in Colombia, and timber in Cambodia).
Abstract: Of the 27 major armed conflicts that occurred in 1999, all but two took place within national boundaries. As an impediment to development, internal rebellion especially hurts the world's poorest countries. What motivates civil wars? Greed or grievance? Collier and Hoeffler compare two contrasting motivations for rebellion: greed and grievance. Most rebellions are ostensibly in pursuit of a cause, supported by a narrative of grievance. But since grievance assuagement through rebellion is a public good that a government will not supply, economists predict such rebellions would be rare. Empirically, many rebellions appear to be linked to the capture of resources (such as diamonds in Angola and Sierra Leone, drugs in Colombia, and timber in Cambodia). Collier and Hoeffler set up a simple rational choice model of greed-rebellion and contrast its predictions with those of a simple grievance model. Some countries return to conflict repeatedly. Are they conflict-prone or is there a feedback effect whereby conflict generates grievance, which in turn generates further conflict? The authors show why such a feedback effect might be present in both greed-motivated and grievance rebellions. The authors' results contrast with conventional beliefs about the causes of conflict. A stylized version of conventional beliefs would be that grievance begets conflict, which begets grievance, which begets further conflict. With such a model, the only point at which to intervene is to reduce the level of objective grievance. Collier and Hoeffler's model suggests that what actually happens is that opportunities for predation (controlling primary commodity exports) cause conflict and the grievances this generates induce dias-poras to finance further conflict. The point of policy intervention here is to reduce the absolute and relative attraction of primary commodity predation and to reduce the ability of diasporas to fund rebel movements. This paper - a product of the Development Research Group - is part of a larger effort in the group to study civil war and criminal violence. For more on this effort, go to www.worldbank.org/research/conflict. Paul Collier may be contacted at pcollier@worldbank.org.
5,349 citations
TL;DR: The authors investigated the causes of civil war, using a new data set of wars during 1960-99 and found that economic viability appears to be the predominant systematic explanation of rebellion, while atypically severe grievances such as high inequality, a lack of political rights, or ethnic and religious divisions in society.
Abstract: This study investigates the causes of civil war, using a new data set of wars during 1960-99. Rebellion may be explained by atypically severe grievances, such as high inequality, a lack of political rights, or ethnic and religious divisions in society. Alternatively, it might be explained by atypical opportunities for building a rebel organization. Opportunity may be determined by access to finance, such as the scope for extortion of natural resources, and for donations from a Diaspora population. Opportunity may also depend upon factors such as geography: mountains and forests may be needed to incubate rebellion. These explanations are tested and find that opportunity provides considerably more explanatory power than grievance. Economic viability appears to be the predominant systematic explanation of rebellion. The results are robust to correction for outliers, alternative variable definition, and variations in estimation method
3,808 citations
TL;DR: The authors found that in ethnically diverse neighbourhoods residents of all races tend to "hunker down" and trust (even of one's own race) is lower, altruism and community cooperation rarer, friends fewer.
Abstract: Ethnic diversity is increasing in most advanced countries, driven mostly by sharp increases in immigration. In the long run immigration and diversity are likely to have important cultural, economic, fiscal, and developmental benefits. In the short run, however, immigration and ethnic diversity tend to reduce social solidarity and social capital. New evidence from the US suggests that in ethnically diverse neighbourhoods residents of all races tend to ‘hunker down’. Trust (even of one's own race) is lower, altruism and community cooperation rarer, friends fewer. In the long run, however, successful immigrant societies have overcome such fragmentation by creating new, cross-cutting forms of social solidarity and more encompassing identities. Illustrations of becoming comfortable with diversity are drawn from the US military, religious institutions, and earlier waves of American immigration.
3,466 citations
References
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TL;DR: The authors show that the Musgrave-Samuelson analysis, which is valid for federal expenditures, need not apply to local expenditures, and restate the assumptions made by Musgrave and Samuelson and the central problems with which they deal.
Abstract: NE of the most important recent developments in the area of "applied economic theory" has been the work of Musgrave and Samuelson in public finance theory.2 The two writers agree on what is probably the major point under investigation, namely, that no "market type" solution exists to determine the level of expenditures on public goods. Seemingly, we are faced with the problem of having a rather large portion of our national income allocated in a "non-optimal" way when compared with the private sector. This discussion will show that the Musgrave-Samuelson analysis, which is valid for federal expenditures, need not apply to local expenditures. The plan of the discussion is first to restate the assumptions made by Musgrave and Samuelson and the central problems with which they deal. After looking at a key difference between the federal versus local cases, I shall present a simple model. This model yields a solution for the level of expenditures for local public goods which reflects the preferences of the population more adequately than they can be reflected at the national level. The assumptions of the model will then be relaxed to see what implications are involved. Finally, policy considerations will be discussed.
12,105 citations
TL;DR: Wilson's "The Truly Disadvantaged" as mentioned in this paper was one of the sixteen best books of 1987 and won the 1988 C. Wright Mills Award of the Society for the Study of Social Problems.
Abstract: ""The Truly Disadvantaged" should spur critical thinking in many quarters about the causes and possible remedies for inner city poverty. As policy makers grapple with the problems of an enlarged underclass they--as well as community leaders and all concerned Americans of all races--would be advised to examine Mr. Wilson's incisive analysis."--Robert Greenstein, "New York Times Book Review" "'Must reading' for civil-rights leaders, leaders of advocacy organizations for the poor, and for elected officials in our major urban centers."--Bernard C. Watson, "Journal of Negro Education" "Required reading for anyone, presidential candidate or private citizen, who really wants to address the growing plight of the black urban underclass."--David J. Garrow, "Washington Post Book World" Selected by the editors of the "New York Times Book Review" as one of the sixteen best books of 1987. Winner of the 1988 C. Wright Mills Award of the Society for the Study of Social Problems.
7,278 citations
TL;DR: In this paper, a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries is analyzed.
Abstract: This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.
7,191 citations
TL;DR: This article showed that ethnic diversity helps explain cross-country differences in public policies and other economic indicators in Sub-Saharan Africa, and that high ethnic fragmentation explains a significant part of most of these characteristics.
Abstract: Explaining cross-country differences in growth rates requires not only an understanding of the link between growth and public policies, but also an understanding of why countries choose different public policies. This paper shows that ethnic diversity helps explain cross-country differences in public policies and other economic indicators. In the case of Sub-Saharan Africa, economic growth is associated with low schooling, political instability, underdeveloped financial systems, distorted foreign exchange markets, high government deficits, and insufficient infrastructure. Africa's high ethnic fragmentation explains a significant part of most of these characteristics.
5,648 citations
TL;DR: In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule as mentioned in this paper, where voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting.
Abstract: In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule. Voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting. The share of earned income redistributed depends on the voting rule and on the distribution of productivity in the economy. Under majority rule, the equilibrium tax share balances the budget and pays for the voters' choices. The principal reasons for increased size of government implied by the model are extensions of the franchise that change the position of the decisive voter in the income distribution and changes in relative productivity. An increase in mean income relative to the income of the decisive voter increases the size of government.
4,696 citations