Oil and conflict: Not so related after all?

A new paper from Cotet and Tsui.

This paper examines the effect of oil wealth on political violence. …Using a unique historical panel dataset of oil discoveries and extractions, we show that simply controlling for country fixed effects removes the statistical association between the value of oil reserves and civil war onset. This non-result is robust to using natural disaster in oil-producing nations as an instrument for oil price. Other macro-political violence measures, such as coup attempts and irregular leadership transitions, are also not significantly correlated with oil wealth.

To further address endogeneity concerns, we exploit changes in oil reserves over time due to randomness in the success or failure of oil explorations. We find little robust evidence that oil discoveries increase the likelihood of violent challenges to the state in the sample of country-years in which at least one exploratory well is drilled. Rather, oil discoveries increase military spending in the subsample of nondemocratic countries.

…We suggest a possible explanation of our findings based on the idea that oil-rich nondemocratic regimes effectively expend resources to deter potential challengers.

Older ungated version here.

Michael Ross has argued otherwise. Regardless what you believe, however, there’s a striking shortage of null results papers published in top journals, even when later papers overturn the results. I’m more and more sickened by the lack of interest in null results. All part of my growing disillusionment with economics and political science publishing (and most of our so-called findings). Sigh…

Links I liked

  1. John McPhee has a great series on writing in The New Yorker, after five decades there. This week’s, on structure, the best so far.
  2. Salon reviews David Jacobsen’s new book on globalization and the battle for control of women’s bodies
  3. Patricia Marx introduces me to several local outsourcing services I may use in future, not least of which is Task Rabbit
  4. Stumbled on interesting articles on the politics of property rights and sociology of property rights and development. They are gated. Links to ungated versions welcome in the comments.

 

 

The politics behind business performance in Africa

…we use firm-level data for 89 countries to examine formal firm performance. Without controls, manufacturing African firms do not perform much worse than firms in other regions. But they do have structural problems, exhibiting much lower export intensity and investment rates.

Once we control for geography and the political and business environment, formal African firms robustly lead in sales growth, total factor productivity levels and productivity growth. Africa’s conditional advantage is higher in low-tech than in high-tech manufacturing, and exists in manufacturing but not in services.

While geography, infrastructure, and access to finance play an important role in explaining Africa’s disadvantage in firm performance, the key factor is party monopoly. The longer a single political party remains in power, the lower are firm productivity levels, growth rates, and sales growth for manufacturing.

In contrast, the business environment and firm characteristics (except for foreign investment) do not matter as much. We also find evidence that the effects of the political and business environment are heterogeneous across sectors and firms of various levels of technology.

A new NBER paper from Harrison, Lin and Xu. Sadly I do not see an ungated copy. Anyone who sees one please put in comments.

I’ve only been able to skim the paper, but the question, approach and the answer all strike me as incredibly important for lots of reasons. One is that it gets us started on addressing some of the puzzles of development raised by Banerjee and Duflo in their under-read Growth Through the Lens of Development Economics or this Pande and Udry piece on institutions and development (both of which I mentioned last week). In particular, it starts to get far more specific about government and institutional failure than the existing research (which is pretty crude when it comes to political failures).

I don’t think we should take this as evidence that party monopoly is actually what causes the problem (I think the authors would agree with this), but it does start to get us closer to what political failures need more investigation.

Does transparency improve parliamentary performance in an authoritarian regime?

In a democracy, the incentive for improved performance is created by voters’ responses to newly available information. Building on this work, donor projects have begun to export transparency interventions to authoritarian regimes under the assumption that nongovernmental organizations and the media can substitute for the incentives created by voters. Such interventions, however, are at odds with an emerging literature that argues that authoritarian parliaments primarily serve the role of co-optation and limited power sharing, where complaints can be raised in a manner that does not threaten regime stability. We argue that under these conditions, transparency may have perverse effects, and we test this theory with a randomized experiment on delegate behavior in query sessions in Vietnam, a single-party authoritarian regime. We find no evidence of a direct effect of the transparency treatment on delegate performance; however, further analysis reveals that delegates subjected to high treatment intensity demonstrate robust evidence of curtailed participation and damaged reelection prospects. These results make us cautious about the export of transparency without electoral sanctioning.

A new paper by Malesky, Schuler, and Tran in the APSR. Older ungated copy.

When patronage is not enough

How do autocrats hold onto power? Evidence from Kenya, Zambia, Mozambique and Zimbabwe

In each of these cases, an established single- or dominant-party regime faced heightened international pressure, economic crisis, and a strong opposition challenge after 1990. Yet whereas ruling parties in Kenya and Zambia were organized almost exclusively around patronage, those in Mozambique and Zimbabwe were liberation parties that came to power via violent struggle. This difference is critical to explaining diverging post-Cold War regime outcomes: whereas ruling parties in Zambia and Kenya imploded and eventually lost power in these face of crises, those in Mozambique and Zimbabwe remained intact and regimes survived.

…while elite access to power and spoils may ensure elite cooperation during normal times, it often fails to do so during crises. Instead, the identities, norms, and organizational structures forged during periods of sustained, violent, and ideologically-driven conflict are a critical source of cohesion—and durability—in party-based authoritarian regimes.

A new paper from Levitsky and Way. Older ungated copy.

To govern, material rewards are not enough. Non-material bonds–especially cohesion forged in violence and struggle. Interesting addition to the idea that string states are forged in violence and struggle.

 

“The trouble with boys”

A new paper from Bertrand and Pan:

This paper explores the importance of the home and school environments in explaining the gender gap in disruptive behavior. We document large differences in the gender gap across key features of the home environment—boys do especially poorly in broken families. In contrast, we find little impact of the early school environment on noncognitive gaps. Differences in endowments explain a small part of boys’ noncognitive deficit in single-mother families. More importantly, noncognitive returns to parental inputs differ markedly by gender. Broken families are associated with worse parental inputs, and boys’ noncognitive development, unlike that of girls’, appears  extremely responsive to such inputs.

This abstract may not make a lot of sense to non-economists. Basically, the question is where do skills like self-discipline and anti-social behavior come from, whether social or environmental influences matter, and why there’s a gender gap. Worth reading.

Also interesting is a new NBER paper on whether depression in young men is linked to later criminal behavior.

This helps explain some of my current anxiety level (or 9 new facts about economics publishing)

The first four facts:

  1. Annual submissions to the top-5 journals nearly doubled from 1990 to 2012.
  2. The total number of articles published in these journals actually declined from 400 per year in the late 1970s to 300 per year most recently. As a result, the acceptance rate has fallen from 15% to 6%, with potential implications for the career progression of young scholars.
  3. One journal, the American Economic Review, now accounts for 40% of top-5 publications, up from 25% in the 1970s.
  4. Recently published papers are on average 3 times longer than they were in the 1970s, contributing to the relative shortage of journal space.

A new paper by David Card and Stefano Dellavigna. NBER version here. Link to an ungated copy on Dellavigna’s website here.

In another paper, they look at the impact of reducing page limits in the AER and JEEA. AER submission stay steady, but not so at the JEEA. Their conclusion: “a top-5 journal has substantial monopoly power over submissions, unlike a journal one notch below.”

Does the micro evidence tell us anything important about development?

Another plug for grand theory, and disparagement of empirics.

Development economists spend their time these days performing randomized controlled experiments, in which a particular intervention like co-payments for mosquito bed nets are introduced into one group of villages and not into another matched set. This approach establishes causality with a level of certainty approaching that of the randomized trials used in pharmaceutical testing. But while such experiments are useful for evaluating the effectiveness of certain types of public policies, they all operate at a very micro level and don’t aggregate upwards into an understanding of the broader phenomenon of development. It is hard to imagine that all the work being done under this approach will leave anything behind of a conceptual nature that people will remember fifty years from now.

That is Francis Fukuyama, starting off an essay on Albert Hirschman, the great development economist who charted a very different path. (h/t to this commenter)

One of the great puzzles to me is why great thinkers commonly disparage other paths to knowledge. It’s politically effective, if your aim is to promote your agenda over theirs, but most of the time it’s tribal, self-serving, and hinders progress.

It’s certainly tempting to think that the quantitative and micro evidence doesn’t add up to much. Experiments and micro evidence are no panacea, but to say they haven’t changed our fundamental concepts of development and poverty reveals ignorance of the best literature.

Here’s a sample of review articles where the evidence shook my basic conceptions of how development works. All are required reading in my PhD course on political economy of development (along with Hirschman):

  • If you wanted to see how micro evidence has changed our understanding of who is poor and why, on everything from nutrition to capital, I would read Poor Economics by Banerjee and Duflo.
  • If you wanted to understand the new micro evidence helps explain growth puzzles and patterns of cross-country development, I’d recommend their more technical Growth Theory Through the Lens of Development Economics.
  • Psychology and behavioral economics is changing the way we think about economic change small and large. Sendhil Mullainathan’s new book will probably help fill this gap when it’s out, but in the meantime you can read his 2004 piece.
  • Pande and Udry and Besley and Ghatak both summarize how the micro evidence has changed our fundamental concepts of property rights and institutions, and ways (expected and not) they influence development.
  • Olken and Pande and Banerjee, Hama, and Mullainathan do the same for corruption and development.

To me, the great problem with some of the most interesting questions of political economy (“Who votes, protests, riots or rebels, and why?”, for instance) suffer from a terrific absence of microfoundations and good evidence. Grand theories and case studies are abundant, and important, but alone ultimately fail to answer the questions.

The death of theory?

The field is moving away from developing or carefully employing theories and instead emphasizing the testing of empirical hypotheses through some combination of quantitative or qualitative analysis. Such work is not purely inductive or atheoretical, but theory plays a relatively minor role and most of the effort goes into collecting data and trying to draw reliable causal inferences from it.

Hence the paradox: theory is the most esteemed activity in the field, yet hardly anybody wants to do it anymore. John Mearsheimer and I explore this paradox in a new paper, and argue that this shift away from theory is a mistake.

That is Stephen Walt, on the field of International Relations. He points to a similar trend in economics.

Just back from vacation, I haven’t been able to read the paper closely. I see very good points, but these questions come to mind:

  • Is theory in absolute or just relative decline? More is being published now that 20 or 30 years ago.
  • Is this just the consequence of falling technological barriers? Until 20 years ago, the statistical programs and computing power weren’t available to do large-scale empirical work. So we would expect some rebalancing, even overcompensation.
  • By this logic, the marginal gains to new empirical work should be greater than the marginal gains to new theoretical work, no?
  • Can we separate novel theory from empirics? Yes, empirical papers have a much shorter half life, but how do you reject old and generate new theory without new empirical facts?
  • I’d argue that most of the interesting new theories in economics and politics–on growth, war, economic and technical change, democratization, etc–come out of new and unexpected stylized facts. But that would be a longer post.

“No one to whom I have begun recounting the story believes it will end well”

It begins with a story of a vineyard:

In the early Seventies it was bought by a wealthy couple, who consulted professors Emile Peynaud and Henri Enjalbert, the world’s leading academic oenologist and oenological geologist respectively. Between them these men convinced the couple that their new vineyard had a theoretically ideal microclimate for wine-making. When planted with theoretically ideal vines whose fruits would be processed in the optimal way according to the up-to-date science of oenology, this vineyard had the potential to produce wine to match the great first growths of Bordeaux. The received wisdom that great wine was the product of an inscrutable (and untransferable) tradition was quite mistaken, the professors said: it could be done with hard work and a fanatical attention to detail. The couple, who had no experience of wine-making but much faith in professorial expertise, took a deep breath and went ahead.

If life were reliably like novels, their experiment would have been a disaster. In fact Aimé and Véronique Guibert have met with a success so unsullied that it would make a stupefying novel (it has already been the subject of a comatogenic work of non-fiction).

No one to whom I have begun recounting the story believes it will end well. Most people are extremely unwilling to grant that faith in textbook knowledge should ever be crowned with success. We have a very strong narrative bias against such stories.

That is Paul Seabright on James Scott, writing in 1999 (I have only just seen this now, courtesy of Suresh Naidu).

Where Scott is the grand skeptic of planning and scientific management, Seabright reminds us there are successes for every failure. A nice counterpoint to my recommendation that we all ought to see more like an anarchist.

Still, most policymakers do not need to be reminded that their grand plans can work. They need the kick in the butt from Scott more.

If you haven’t read Seabright’s book on the biological and evolutionary underpinnings of economic and social behavior, you must. One of my favorites.

 

Six decades of economics publishing

Presenting data on all full-length articles published in the three top general economics journals for one year in each of the 1960s through 2010s, I analyze how patterns of co-authorship, age structure and methodology have changed, and what the possible causes of these changes may have been.

A new paper by Daniel Hammermesh. He examines the QJE, AER and JPE.

Especially interesting is the changing number of authors (production function?):

Screen Shot 2012-12-24 at 8.41.23 AM

Authors are getting older. And now just 87.4% male dominated instead of  95.3%!

Screen Shot 2012-12-24 at 8.41.41 AM
And apparently we are getting more empirical but less likely to use existing data (in spite of the Internet!).

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M&E: The next generation

There is an inherent tension between implementing organizations—which have specific objectives and narrow missions and mandates—and executive organizations—which provide resources to multiple implementing organizations.

…Monitoring and Evaluation (M&E) has always been an element of the accountability of implementing organizations to their funders. There has been a recent trend towards much greater rigor in evaluations to isolate causal impacts of projects and programmes and more ‘evidence base’ approaches to accountability and budget allocations Here we extend the basic idea of rigorous impact evaluation—the use of a valid counter-factual to make judgments about causality—to emphasize that the techniques of impact evaluation can be directly useful to implementing organizations (as opposed to impact evaluation being seen by implementing organizations as only an external threat to their funding).

We introduce structured experiential learning (which we add to M&E to get MeE) which allows implementing agencies to actively and rigorously search across alternative project designs using the monitoring data that provides real time performance information with direct feedback into the decision loops of project design and implementation.

Our argument is that within-project variations in design can serve as their own counter-factual and this dramatically reduces the incremental cost of evaluation and increases the direct usefulness of evaluation to implementing agencies. The right combination of M, e, and E provides the right space for innovation and organizational capability building while at the same time providing accountability and an evidence base for funding agencies.

A new paper by Lant Pritchett, Salimah Samji and Jeffrey Hammer.

Why don’t more people migrate?

Credit constraints matter.

This paper investigates the extent to which financial constraints limit international labor migration flows in a developing country context. Income growth in these settings can have two countervailing effects. Rising income may relax liquidity constraints that prevent profitable migration among poor households. However, higher income also implies smaller wage gaps with rich countries and a higher opportunity cost of migrating.

…I then test for financial constraints in Indonesia using new administrative panel data on international migration from 66,000 villages. I capture income variation arising from transitory rainfall shocks and a large, sustained increase in domestic rice prices following an unanticipated ban on rice imports.

…positive rainfall and rice price shocks are associated with an increase in international migration rates between 2005 and 2008.

…I find on the intensive margin that rainfall and rice price shocks lead to significant increases in the share of village residents working abroad. Furthermore, the elasticity of flow migration rates with respect to these shocks is higher in villages with a greater mass of small landholders. On the extensive margin, villages with a greater mass of large landholders are more likely to have any migrants.

Both findings are consistent with binding financial constraints in the model.

A new paper by Sami Bazzi, a UCSD job market candidate.

Chart (but not pick-me-up) of the day: Deaths around the world

deaths.jpg

This is 2010 data, so most striking is the Haiti earthquake. As far as I can tell, however, the effect of Vodka on eastern European cardio is worse. No doubt intentional and unintentional injuries are related as well.

AIDS in southern Africa should give us all pause. War deaths seem lower than expected for the continent, but I guess 2010 (and the years since) have been more peaceful than the previous two decades. That too is a mostly unsung accomplishment.

Bottoms up to the Russians in the audience.

From the Guardian data blog. h/t Pia Raffler