Recent growth accelerations in Africa are characterized by increasing productivity in agriculture, a declining share of the labor force employed in agriculture and declining productivity in modern sectors such as manufacturing. To shed light on this puzzle, we disaggregate firms in the manufacturing sector by size using two newly created panels of manufacturing firms, one for Tanzania covering 2008-2016 and one for Ethiopia covering 1996-2017. Our analysis reveals a dichotomy between larger firms that exhibit superior productivity performance but do not expand employment much, and small firms that absorb employment but do not experience any productivity growth. We suggest the poor employment performance of large firms is related to use of capital-intensive techniques associated with global trends in technology.
We study preferences for government action in response to layoffs resulting from different types of labourmarket shocks. We consider: technological change, a demand shift, bad management and three kinds of international outsourcing. Support for government intervention rises sharply in response to shocks and is heavily biased towards trade protection. Trade shocks generate more demand for protectionism and, among trade shocks, outsourcing to a developing country elicits greater demand for protectionism. The ‘bad management’ shock is the only scenario that induces a desired increase in compensatory transfers. Trump supporters are more protectionist than Clinton supporters, but preferences seem easy to manipulate: Clinton supporters primed with trade shocks are as protectionist as baseline Trump voters. Highlighting labour abuses in the exporting country increases the demand for trade protection by Clinton supporters but not Trump supporters.
Economics has not been immune to the ongoing and long overdue reckoning with American racial injustice. Many students and scholars think the conceptual approaches of economics and empirical practices implicitly marginalize or discount Black and Latinx perspectives. We are organizing this panel of scholars working in econ-adjacent areas to hear their thoughts on what they think economics could learn from other disciplines.
July 13, 2020. Moderator: Sandy Darity, Duke Panelists: Daina Ramey Berry, UT Austin, History; Arjumand Siddiqi, U Toronto, Public Health; Eduardo Bonilla-Silva, Duke, Sociology; Mario Small, Harvard, Sociology
There is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind. I start with an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump. I then provide a conceptual framework that identifies four distinct channels through which globalization can stimulate populism, two each on the demand and supply sides of politics, respectively. I evaluate the empirical literature with the help of this framework, discussing trade, financial globalization, and immigration separately. I conclude the paper by discussing some apparently anomalous cases where populists have been against, rather than in favor of trade protection
This paper develops a taxonomy of political regimes that distinguishes between three sets of rights - property rights, political rights and civil rights. The truly distinctive nature of liberal democracy is the protection of civil rights (equal treatment by the state for all groups) in addition to the other two. The paper shows how democratic transitions that are the product of a settlement between the elite (who care mostly about property rights) and the majority (who care about political rights), generically fail to produce liberal democracy. Instead, the emergence of liberal democracy requires low levels of inequality and weak identity cleavages.
Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change – the reallocation of labor from low- to high-productivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa, or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.
I distinguish between political and economic populism. Both are averse to agencies of restraint, or, equivalently, delegation to technocrats or external rules. In the economic domain, delegation to independent agencies (domestic or foreign) occurs in two different contexts: (a) in order to prevent the majority from harming itself in the future; and (b) in order to cement a redistribution arising from a temporary political advantage for the longer-term. Economic policy restraints that arise in the first case are desirable; those that arise in the second case are much less so.
As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization, they have become more difficult to fit into received economic theory. Nevertheless, most economists continue to regard trade agreements such as the Trans Pacific Partnership (TPP) favorably. The default view seems to be that these arrangements get us closer to free trade by reducing transaction costs associated with regulatory differences or explicit protectionism. An alternative perspective is that trade agreements are the result of rent-seeking, self-interested behavior on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms. They may result in freer, mutually beneficial trade, through exchange of market access. But they are as likely to produce purely redistributive outcomes under the guise of “freer trade.”