African Leaders, Longevity, Policies, and Impacts
Sunday, Jan. 7, 2018 1:00 PM - 3:00 PM
- Chair: Leonard Wantchekon, Princeton University
The Payoff: Long-serving Political Leaders and Foreign Investors
AbstractDo political leaders who stay in power for longer periods attract more foreign investors? Opposing theoretical positions on this important question have been advanced but thus far have not been subjected to empirical scrutiny, especially in contexts characterized by weak political institutions. Using a novel dataset on the personal characteristics of African leaders spanning the period from 1960 to 2011, we find that political longevity increases foreign direct investment inflows. This effect is robust to controlling for leader unobserved heterogeneity using leader fixed effects. The magnitude of the effect does not change much when estimating a variety of dynamic models with or without external instrumental variables, and when using a model that explicitly accounts for the possible feedback effect of political longevity on foreign investment. Importantly, we find that the effect of political longevity is greater in more democratic regimes but that democracy itself does not have any effect when a leader is too new in power. Exploring the mechanism, we find that greater longevity of leaders promotes the rule of law, reduces corruption, and improves physical infrastructure.
Bargaining Matters: Taxation and Public Service Provision Under Natural Resource Revenue Sharing Arrangements
AbstractRevenue sharing arrangements are increasingly common in natural resource abundant countries where the majority of government tax revenue comes from resource exports. The determinants of the distribution of tax revenue among constituents under these arrangements in resource rich settings remain relatively understudied in the literature. Additionally, the relationship between revenue allocation from these arrangements and local public service provision is an important empirical question. This paper seeks to answer these questions by modeling revenue sharing arrangements and public service provision as outcomes of bargaining between federal government and subnational agents. It then uses a novel dataset of revenue allocations, expenditures and local public service provision from military Nigeria, with available data over 1979 to 1999, to test the implications of the simple framework. Results show that subnational agents with higher measured bargaining power have higher revenue allocation and expenditure, though outcomes for public service provision are more ambiguous. The results are robust to extensive controls and an instrumental variables strategy. I explore the implications of these results for attitudes towards tax compliance.The results provide important insights into framing optimal fiscal policy aimed at promoting economic development.
Land or People? African Elites, Pre-colonial Ethnic Centralization, and Development
AbstractThis paper studies how incentives facing elites shape human capital investments, and long-run economic development. We propose that land-owning elites in areas where land is abundant and of good quality will be less likely to invest in improvements to labor (human capital), but more likely to invest in land improvements. This would be the case if investments in human capital is more complementary to non-agricultural production relative to agriculture. We test the theory using variation in pre-colonial ethnic centralization and land quality across West Africa, and find that individuals living in areas traditionally occupied by centralized ethnic groups with abundant fertile land tend to have less human capital (schooling and literacy), and are also less likely to live in districts with schools. These findings are robust to a variety of confounding geographic and historical controls, but are crucially not found for general investments in roads and railways indicating that under-investment in human capital is not driven by general weak state capacity in centralized areas with abundant land. The empirical findings are complemented with case studies of the response of traditional rulers to British colonial education investments in areas with and without abundant fertile land.
Georgia State University
Massachusetts Institute of Technology
- O1 - Economic Development
- N0 - General