The Davidson Institute encourages researchers to share their findings in the areas of emerging markets through the William Davidson Institute Working Paper Series. This is the only working paper series in North America to focus exclusively on business, economic and policy issues in emerging markets. The Davidson Institute Working Paper Series are top ranked worldwide in terms of downloads.
Recent Working Papers
DO ELECTIONS SLOW DOWN ECONOMIC GLOBALIZATION PROCESS IN INDIA? IT'S POLITICS STUPID!
Krishna Chaitanya Vadlamannati
WP No. 929
(September, 2008)
Abstract: I investigate whether timing of the elections impact economic globalization process or not in India. In other words, do elections slowdown economic globalization process? The theoretical underpinning is that, policies of economic globalization lead to economic and social hardships in short run but benefit the economy in the long run. The motto behind
slowing down the economic globalization process before elections is that it leads to polarization of voters and thus negatively affects the incumbent government. I make use
of Axel Dreher’s economic globalization index and construct ‘instrumental electoral cycle’ to capture the scheduled and midterm election cycle. Using time series data for India for the period 1970 – 2006, I find that scheduled elections are associated with slow down in economic globalization, whereas midterm elections are not. Replacing Dreher’s economic globalization index with our modified globalization index does not alter the results. I also find that slow down in economic
globalization process is responsive to the propinquity to a scheduled election year. Meaning, as incumbent government nears the scheduled elections, economic globalization process keeps slowing down, while this is exactly opposite during the early years of incumbent government in office. These results suggest that elections generate “electoral globalization cycle” in developing democratic country like India.
>> Download PDF
Jel Codes: D72
Keywords: Economic globalization; Election cycles; India
IMPACT OF INSTITUTIONAL QUALITY ON HUMAN RIGHTS ABUSES IN TRANSITION ECONOMIES
Krishna Chaitanya Vadlamannati; Artur Tamazian
WP No. 928
(August, 2008)
Abstract: This purpose of this paper is to examine the direct effects of institutional quality on human rights abuses in transition economies. We make use of an alternative empirical approach for evaluation of institutional system’s development in transition economies developed by Chousa et al. (2005). To assess this relationship, along with institutional quality index, which is an operational indicator of institutional system dynamics to
observe institutional reforms-economic growth interdependence, we also construct cost of decline in institutional quality and transition from communist to reforms years variables. We also evaluate the effect of institutional quality on human rights abuses conditioned by the level of transition from communist to reforms years. The empirical work reveals that an improvement in institutional quality increases government respect for human rights. While, any decline in institutional quality leads to human rights abuses. The results also show that government respect for human rights are strongly associated with transition towards reforms years.
>> Download PDF
Jel Codes: P20, P24, Z0
Keywords: Institutional Quality; Human Rights; Transition economies
DO CHOICE & SPEED OF REFORMS MATTER FOR HUMAN RIGHTS DURING TRANSITION?
Krishna Chaitanya Vadlamannati
WP No. 927
(July, 2008)
Abstract: Conventional wisdom posits absence of systematic relationship between economic reforms and human rights. Taking the case of transition economies, Vadlamannati & Soysa (2008) shows significant positive relationship between economic reforms and
various forms of human rights. This brings us to the next question on the impact of choice and speed of reforms on human rights performance. In other words, does speed and choice of reforms increase or decrease government respect for human rights in transition economies? This is the question our paper tries to address. The Anglo-Saxon perspective is that speed of reforms lead to growth and development which inturn generates respect for human rights. While skeptics contend that rushing towards a free market economy would always be destructive as development process tends to be exclusive creating exogenous shocks leading to social and economic unrest. This leads to
domestic violence and conflicts, allowing governments to resort to repressive measures. We use a new method to construct ‘speed of reforms’ variable for transition economies for the period 1993 – 2006 to estimate its impact on all forms of human rights. Further, using the methodology of Wolf (1999) on discrete groupings of choice of reforms of transition economies, we classify the countries under radical, gradual and laggard
reformer groups. We measure the impact of speed of reforms on human rights performance conditioned by choice of reforms.
Our findings show that speed of reforms significantly improves government respect for all forms of human rights, while volatility in reforms is associated with human rights abuses. But the interesting finding is that, controlling for the speed of reforms attained, the choice with which the country has reformed plays pivotal role in determining human rights performance. While radical reforming countries are associated with better human
rights performance, gradualists and laggards share poor human rights performance.
>> Download PDF
Jel Codes: P0, P21, P30, P36, P48
Keywords: Speed & choice of economic Reforms; Human rights; Transition economies.
SOCIOECONOMIC, INSTITUTIONAL & POLITICAL DETERMINANTS OF HUMAN RIGHTS ABUSES:
Krishna Chaitanya Vadlamannati
WP No. 926
(July, 2008)
Abstract: We conduct an econometric analysis of socioeconomic, institutional and political factors determining government respect for human rights within India. Using time series crosssectional
data for 28 Indian states for the period 1993 – 2002, we find that internal threat poised by number of social violence events, presence of civil war and riot hit disturbed areas are strongly associated with human rights abuses. Amongst socioeconomic factors, ‘exclusive’ economic growth, ‘uneven’ development, poor social development spending, youth bulges and differential growth rates between minority religious groups explain the
likelihood of human rights violations. Capturing power at the state and central level by Hindu national parties’ viz., Bharatiya Janata Party (BJP) and Shiv Sena, further help understand the incidence of human rights violations within India. We also address the possible endogenity problem between human development and human rights. Using a system of simultaneous equation, we find that improvement in human development have positive impact on government respect for human rights within
India.
>> Download PDF
Jel Codes: R10, R11, R50, Z12
Keywords: Human rights; civil war; socioeconomic conditions; sub national politics;Human development; India.
Does the Entry Mode of Foreign Banks Matter for Bank Efficiency? Evidence from the Czech Republic, Hungary, and Poland
Ngoc-Anh Vo Thi; Dev Vencappa
WP No. 925
(July, 2008)
Abstract: This paper investigates the impact of specific modes of entry of foreign banks, i.e. greenfield investment versus merger and acquisition, on bank performance in three transition economies – the Czech Republic, Hungary, and Poland. We use stochastic
frontier analysis to model and measure the cost efficiency of banks. We adopt a maximum likelihood approach to estimation in which the variance of the one-sided error term is modeled jointly with the cost frontier, thus enabling us to retrieve efficiency
scores, as well as estimating the various determinants of X-inefficiency. We first find that foreign banks are generally more cost efficient than their domestic counterparts, a result
that confirms those of the existing empirical literature. We then turn our focus to comparative performance of greenfield banks versus merger and acquisition banks (M&As), and of M&As versus domestic banks. The results show that on average, M&As are surpassed in terms of efficiency by greenfields banks, but no cost efficiency difference is apparent between M&As and domestic banks. However, we find a strong age effect with respect to M&As which suggests that the evolution of M&As’ efficiency follows an inverse U-shape, that means M&As tend to get more inefficient following the acquisition, but approximately 4 years and a haft later, their efficiency starts to improve.
>> Download PDF
Jel Codes: F36, G21, C01
Keywords: Banking, Transition Economies, Foreign Bank Entry, Greenfield, Mergers and Acquisitions, Stochastic Frontier Analysis, Cost Efficiency