Tuesday, November 30, 2010

Session 11: Legislative Institutions and the Resource Curse

10 comments:

  1. This week we have two streams of readings, so I will be better separate my discussions into two parts.

    For resource curse, I agree it has been recently one of the most popular issues of comparative political research, and many studies have been done to tackle the causal mechanisms that connect natural resource wealth and the symptoms caused by it. But I find the readings quite intuitive and inadequate and wonder why few researchers have really tackled the institutional framework the underlies the extraction and expenditure of natural resources - For instance, Ross and Haber at al. simply measure how much resource wealth each country has and measures how well a given country does on a particular aspect of governance. By no means I suggest their work is unimportant (Ross' article does effectively test many popular hypotheses summarized by Humphrey et al.), but I am more interested in why countries with natural resource wealth still vary from each other in terms of economic and democratic development, or why countries without such endowment display similar political and economic patterns as Haber et al. apt point out. Another issue is: If researchers only focus on countries with natural resource wealth and find a similar misfortune they share with each other, will it be possible to tease out a convincing causal mechanism? Regarding these issues, I find Jones Luong and Weinthal's book (Oil is not a curse), in which they explore how the ownership structure of oil industry will shape a country's fiscal institutions, extremely refreshing. Indeed, after reading many work that claims "institutions do matter," the readings of natural resource curse we have for this week surprisingly overlook this aspect. They all seem to assume institutions as the dependent variable of resource wealth, instead of the driving force of resource curse.

    One minor point for Haber et al.'s article: I do not quite understand why they use "Net Polity" as the dependent variable (I will really appreciate if any stat expert can explain this for me). If I am not mistaken, this variable is used to calculate the yearly differences between countries in a single region with and without countries (as part of their "counter-factual" analysis). If this is true, then does the increase in this parameter suggest the inclination toward democracy (see p.8)? I find this part is rather confusing even though I totally understand and agree with their later criticism on the conventional wisdom of resource curse (i.e. p.10-p.13). I believe it is a good article, and it is going to be published, but I do not get why they use this variable in their model...

    ReplyDelete
  2. Regarding legislative institutions, first I would like to say I have always been admiring those who can dig out new puzzles and theories for such a long-standing and complex topic. Shepsle et al.'s article is especially helpful for their succinct and critical review on the positive theories of congressional institutions. I particular love their effort of integrating different theories and specify how they complement each other, and I am convinced that to a large extent the informational rationale and the partisan rationale all have their own merits and should be integrated with the demand-side theories of cooperation and exchange. Samuels et al.'s book in my opinion is almost completely established upon Kiewiet-McCubbins' theory of the delegation between the party leader and its members. Even though their book is quite dense, I still find their analysis quite clear and amusing. Moreover, they also demonstrate a quite insightful way to distinguish presidential and parliamentary systems (p.17-p.18), which is further elaborated by Cheibub et al.'s article. Even though they seem to be not intended to provide a clear alternative to differentiate democracies,their challenge to another conventional belief for analysts to distinguish the presidential democracies from the parliamentary ones is rather compelling.

    However, first for Samuels et al., I wonder why they find the constitutional form of government can unilaterally determine political parties' behavior and organization. I do see the differences between parties under presidentialism and the ones under parliamentarism given the separation of power in presidential democracies, but I find somehow this inadequate. If the leaders of presidentialized parties do enjoy more discretion from their legislative counterparts, how do the real (technical) organizational "forms" or "structures" of them differ from that of parliamentary political parties? They probably address this question in other chapters. Also, why could the LDP in Japan dominate the whole political arena from 1955 to 1993 while the British political system breeds relatively stable two-party political competition (provided that they are both parliamentary democracies)? To account for this puzzle, I always believe electoral system does play a role here, and it will be more comprehensive to study the interaction between parties, form of government and elections. Some electoral rules, as many scholars commonly caution, indeed play a critical role in shaping the party system. I wonder if Samuels et al. can incorporate this aspect into their analysis. But in any case, the argument that party acts as a critical instrument to solve collective dilemma is quite compelling, and it may shed some light on current political turmoil in Japan: The parliamentary system is not responsible for failing to coordinating divergent and conflicting local interests (which I have heard a lot from many of my Japanese friends). What to be blamed is the party. The leading party (i.e. LDP) used to have a very good (though quite secretive) intraparty coordination system with rather strong and cohesive centralized leadership, but the current leading party (DPJ) is apparently incapable of this task.

    Last thought: I wonder if the search for a timeless theories should command our research. Sometimes I do feel many political scientists take this as their ultimate goal in their work (esp. some work on democratization), but Shepsle et al.'s article brings me to reconsider this issue. Theories may be conditioned by the time periods we are referring to, and it may be risky if we treat our work as timeless and place our analysis in a historical vacuum. Haber et al's point that many countries cursed by their oil wealth have historically been nondemocratic regimes more or less parallels with this point.

    ReplyDelete
  3. Chao-yo, I agree that a lot of the work done on the resource curse seem to overlook the fairly obvious fact that institutions play a big role in whether or not a country experiences the resource curse. One only has to look at developed economies that have oil (the US, Norway, Great Britain) to see that they did not/do not experience the problems that many developing countries are facing. However, I read a somewhere (I've been doing a lot of reading about the resource curse recently and can't quite remember where I read) that dependence on oil revenues may play an important role on affecting institutions (or at least, distorting decision making processes); thus, countries such as the US, that had strong (ish) institutions did not experience the effects of the resource curse because they had fairly diversified economies and did not rely as heavily on oil revenues (additionally, they did not produce the amounts that we see today). Overall, it seems hard to say exactly how oil affects institutions, and in turn, how institutions affect oil. While it seems intuitively obvious to say that strong institutions would be able to prevent the resource curse, when the Netherlands found oil in the 60s, they experienced, at the very least, the economic effects (the originator for the term "Dutch disease"), and they did have strong institutions.

    I think Ross's work on the resource curse has been really interesting. The spending effect, which he discusses at length in both articles, is particularly fascinating to me. What seems especially worthy to note is that while a lot of policy has been directed at promoting good social spending of oil revenues (increases to education or welfare programs), Ross remarks that Middle Eastern countries provide good social welfare (free education and healthcare in Bahrain, I think was one of his examples) benefits to their citizens, and that may have an affect on suppressing their desire for democracy. If providing this sort of 'cradle to grave' spending on a society may hamper a society's desire for democracy, then what is the best way to spend oil revenues?

    ReplyDelete
  4. I rather like the resource curse literature, and I think my favorite article for this week was the Haber piece, although I will confess that I, too, got a little confused by exactly what they were doing methodologically. It seems like a good idea -- as they say, Saudi Arabia is not Switzerland with oil, so developing some regional comparisons and then trying to do sets of those comparisons that span the globe makes sense. But did they actually succeed -- there's the rub. I can't quite adjudicate that question. Relatedly, is there a strong theoretical reason to, historically speaking, group countries by region because of the way colonialism operated such that powers seemed to play "The Great Game" in one arena after another, rather than have colonial enterprises randomly strewn about the globe? I think that might make sense in the Middle East, but I'm not sure if that holds elsewhere.

    ReplyDelete
  5. @ Chao yo: I agree with you regarding Jones Luong and Weinthal's book on the subject of the resource curse: I think this is a great new way to think about the resource curse and is actually a good complement to the assigned reading this week. Anyway, I wanted to comment on the Kitschelt piece in the recommended reading section because I think his thesis that both programmatic and clientelistic linkages can lead to responsibility and accountability is very interesting. The idea that clientelism may actually have sustained democracy in societies with large inequality and little redistribution has important implications for states with resources. Kitschelt points out that clientelistic and programmatic linkages should be treated as equal insofar as they have the capacity to organize and institutionalize relations of democratic accountability and responsiveness. Further, he claims that in some states clientelistic politics could serve as the functional equivalent of the redistributive welfare state. If we apply this to states with resources, clientelism could theoretically strengthen citizen politician linkages rather than undermine them.

    ReplyDelete
  6. Some comments on the readings on the resource curse (of someone not familiar with the resource curse literature!):

    1) Authors seem to often refer to "natural resources" but then mostly limit to oil and gas. The Humphreys et al. chapter is a great example of this. Mining resources are included in the general argument of the resource curse, but not often not in its materialization. Besides, I'm wondering how much we can assimilate oil, gas, and other mining resources to have the same impact or non-impact. How are they different? On which criteria can we distinguish them?

    2) And can we see different impacts for a same resource along time? Of what I understand of the cross-national analyses conducted, they do not take into account the changing international/ resource contexts relating to the resources. How large is the demand? Have new sources been discovered somewhere else that lower the strategic importance of the resource? I think this more multi-dimensional and qualitative analysis could be useful to clarify the resource curse/ blessing impacts and the specificities of each case...

    3) In this line of thought, I believe that analyses of the natural resources/ democracy link need to include analyses of the impact of natural resources interest groups on coups d'etat. Of what I know, this is neither very present in the coup d'etat literature (which emphasizes more factors like military forces, state capacity, etc.). I think this would be an interested research to pursue. And it would bring the analyses closer to one possible causal mechanism.

    4) Related to point 3. I believe that the point Ross makes about foreign interventions is not very convincing because he limits them to military ones. On p.19, he says: "Perhaps foreign support from great powers nonetheless helps authoritarian rulers stay in power, but through more subtle pathways. Still, there is no clear evidence for this mechanism." This is to my point of view a fundamental point that needs to be clarify.

    5) On Haber and Menaldo: I think they take a big fish (and almost two at the same time!). One thing I'm skeptical about their mechanism is that they assume that what impacts democratization is "history, geography, culture, level of economic development, and degree of democratization" (p.7). How much is this generally accepted and can be an assumption?

    ReplyDelete
  7. First of all, I admit I don’t know that much about the resource curse. However, I can ascertain what I perceive to be two of the best works. Humphreys, Sachs and Stiglitz work deals with the economic complexities and yet very clear. They succinctly explain the loss of economic diversification such natural resource wealth may imply. I would need to read especially chapter 12 to see if their success in turning an initially academic topic understandable for the policy maker also holds for their policy recommendations. Changing the structure of incentives when the stakes are so high is not easy. The other work that seems compelling –but I still have to read beyond the introduction- is Dunning’s Crude Democracy.

    Ross’ piece starts by doing something other Professors don’t do: admit “shortcomings” (ie mistakes) and try to fix them. Using per capita is a good fix. The problem is equating natural resources with oil, subscribing Florence’s point. Even if oil might be a similar curse than other resources like gas or minerals, it seems to me that this potentially biases the sample and hinders the extrapolation of the results. Since finding good instrumental variables is difficult –although Haber and Menaldo point at Ramsey 2009 (?)-, Ross reviews potential causal stories. He goes to say that, even if “unlikely”, “it is also possible that there is no real relationship between oil and authoritarianism”. His review of casual stories is helpful for non-experts. “Of course”, it supports his story of the rentier effect, which I do find compelling.

    Finally, Haber and Menaldo piece. They exploit the uncertainty in the literature. Dunning finds that, in Latin American, more oil is more democracy. Ross somewhat contradicts himself by agreeing that “Dunning is right” while,for his data, there is “no impact on Latin America”. In short, the same way settler mortality in Latin America has no effect on institutions (see regressions in AJR 2001), Haber and Menaldo show that this is also the case for natural resource wealth. In the end, they contribute to my impression that this field of research has too many “inconvenient facts” – a way to say social scientists don’t really know what mechanisms are at work.

    ReplyDelete
  8. Legislative institutions. Shepsle’s and Weingast’s is a comprehensive and yet not clearly written review, in my opinion. My general impression is that we might know what happens but are unable to model it. Or, more precisely, when we model focused on the informational rationale, we leave out another too important explanation. *Doubts: they allude to the textbook era and the Congress reform. What are they referring to? It would be really useful for me –and probably others in the class- if the 4 theories explained by Shepsle and Weingast were clearly explained before being discussed.

    Cheibub and Limongi is a good summary of what we know and a critique of what many thought we knew. Relating to the former, the second paragraph of the introduction: (i) at low levels of economic development, democracies break down; (ii) parliamentary democracies survive more; (iii) “presidential democracies are more likely to emerge out of military rule than civilian dictatorship”. Relating to the latter, their critique of coalition formation is rather not intuitive and puzzling. .. especially since there is no empirical test for it in a regression setting, just crosstabs. I will raise a few more points regarding this article tomorrow in class.

    ReplyDelete
  9. I agree with Joan that the Cheibub and Limongi piece is interesting in critiquing what is supposed to be known. By comparing the survival rates of parliamentary and presidential regimes, they advance the argument that it is not so much the basic principle of the legislature that determines its survival, rather it is more complex. The comparison of presidential and parliamentary regimes, and similarities shown where one would suspect differences, points to what they call the ‘agenda powers that centralize the decision making process.’ So is this centralization a better explanation for the survival or stability, whatever be the type of regime?

    ReplyDelete
  10. I think the Humphreys et al piece provides a very good introduction and summary of the resource curse literature and debate. Not only does the resource curse have adverse effects on economic variables and development, but perhaps more importantly, it also has lasting, negative consequences for the development of important political and social institutions in these countries. For instance, the availability of natural resources can exacerbate the problem of corruption in developing countries and also weaken links of accountability between political leaders and the public.

    The socio-political effects of the resource curse make me think of another popular topic: the effects of foreign aid on institutional development in developing countries. Authors such as Knack have argued that foreign aid "can potentially undermine the quality of governance and public sector institutions by weakening accountability, encouraging rent-seeking and corruption...and alleviating pressures to reform inefficient policies and institutions" (Knack, 2001. "Aid dependence and the quality of governance: Cross-country empirical tests". Southern Economic Journal 68(2).) These factors are akin to those that countries would encounter under a resource curse. An interesting topic could be a comparative analysis of the (negative) effects of foreign aid versus a resource curse in developing countries.

    I would also like to share another interesting article somewhat related to the topic of the resource curse: http://ideas.repec.org/p/edb/cedidp/06-10.html
    The authors argue that free media are less likely to emerge in resource-rich countries, again highlighting the negative effects of resource availability on social institutions in these countries.

    ReplyDelete