We study a model where two parties, one from the left and one from the right, compete for position. The election is to be held in the near future and the outcome is uncertain. Prior to the election, the members of both parties nominate their prime ministerial candidates. Investors care about the outcome since they may invest in irreversible domestic production capital. We find that there is political convergence in the nomination process. In some circumstances, it is only the median voter of the left-wing party that elects a more moderate candidate. In other instances, the members of both parties nominate more conservativeʺ candidates, but there is still convergence. We also show that a higher probability of the left winning the election increases the degree of convergence, while a more globalised economy (greater capital mobility) reduces it.
Bærekraftsmålene har blåst nytt liv i debatten om hvorvidt globale fellesgoder kan og bør finansieres med bistand. I denne replikken til Nikolai Hegertuns essay En stille revolusjon av utviklingspolitikken, argumenterer jeg for at det er liten grunn til å være strengt normativ i dette spørsmålet, blant annet fordi den statistiske definisjonen av bistand ikke utelukker dette; det er presedens for en viss bruk av bistand for slike formål; bistandsvolum uansett ikke er et fullstendig mål på givernes innsats og sier lite om kvaliteten på den; og fordi en rekke nasjonale og regionale fellesgoder – som uten tvil kan finansieres med bistand – er nødvendige for at globale fellesgoder skal kunne produseres eller konsumeres av innbyggere i fattige land. Vi vet heller ikke med sikkerhet at tradisjonell bistand gir større velferdsøkninger i fattige land enn finansiering av globale fellesgoder. Det er mulig å se for seg både at de globale utfordringene sluker bistanden og at de gir støtet til internasjonalt samarbeid i et omfang vi ikke har sett før. Gitt de underliggende drivkreftene – en kombinasjon av altruisme og egeninteresser – er det mer sannsynlig med gradvise endringer i utviklingspolitikken enn en revolusjon.
Abstract in English:Development Policy: Revolution is an Illusion?The Sustainable Development Goals have reinvigorated the debate on whether aid can and should be used to finance global collective goods. In this comment on Nikolai Hegertun's essay Aid's Silent Revolution? (En stille revolusjon av utviklingspolitikken), I argue that the statistical definition of aid does not categorically rule out such financing, for which there are precedents; that aid volumes in any case do not tell the full story about the extent and quality of donor efforts; and that many national and regional collective goods – which certainly can be financed by aid – are necessary for the production and enjoyment of global collective goods by individuals living in developing countries. Moreover, we do not know with certainty that traditional aid produces greater welfare improvements in such countries than global collective goods do. It is possible to envisage both that current global challenges will swamp aid and that they will induce international cooperation on an unprecedented scale. However, given the underlying forces of altruism and national self-interest, a gradual change in development policy is more likely than a revolution.
While often considered a purely financial institution, the IMF has throughout its history performed non-financial services for its membership. The latest example is the Policy Support Instrument (PSI), a certification mechanism established in 2005 for which only poor members are eligible. Based on a formal game-theoretic model, I argue that it is unlikely that the PSI will serve well the intention of facilitating capital market access for members requesting the service. Their low income, the lack of significant consequences for markets, the IMF's traditional reluctance to criticize members, as well as the need to promote the use of the new arrangement indicate that the Fund could emphasize participants' welfare over the interests of private lenders. The continued importance of foreign aid in eligible countries also puts the IMF in the role of gatekeeping such flows, which might conflict with sending clear signals to commercial actors. All these reasons imply that in many cases its seal of approval will be of little use to third-parties, despite the high standards to which PSI-countries are supposed to adhere. The best argument in favor of the PSI being a useful addition to the Fund's tool kit for low-income members is the fact that several countries have already signed a second one. Adapted from the source document.
For politicians in office, reforming public sector institutions is an investment; they must spend resources now in order to achieve future gains. There are no property rights attached to these institutions. Therefore, politicians need to remain in control if they are to reap the full benefits of reform. When the probability of re-election is unaffected by the reform choice, political polarization between incumbent & challenger results in a lower critical value for the cost of investment by reducing the benefits of reform compared to a benchmark of no uncertainty. The reduction in the cut-off rate is increasing in the degree of polarization. However, if undertaking reforms increases this probability, the likelihood of investment might increase, the more so the greater the polarization in preferences. 1 Figure, 1 Appendix, 30 References. Adapted from the source document.
Bærekraftsmålene har gitt klassiske spørsmål innenfor utviklingspolitikken ny relevans: Hvem skal betale for globale fellesgoder? Kan man bruke bistand til dette formålet, eller bør den reserveres for innsats i spesifikke fattige land? I denne artikkelen undersøker vi hvordan DAC-landene, som kollektiv og hver for seg, forholder seg til disse temaene. Vi finner at de sliter med å følge en konsistent linje. Vi mener norske myndigheter kan tjene på å konseptualisere internasjonale fellesgoder bedre. Da blir det for det første enklere å ha en prinsipiell holdning til finansieringen av dem. For det andre kan en slik forståelse gi grunnlag for en strategisk tilnærming til nye initiativer. Det er liten grunn til å tro at man vil ha mye større budsjetter til rådighet fremover. Teorien viser dessuten at man må forvente at det er optimalt å bruke skreddersøm for å fremskaffe ulike fellesgoder. Det krever detaljkunnskap. Vi trenger større forståelse av hvordan eksisterende multilaterale organisasjoner og mekanismer som håndterer både bistand og globale fellesgoder virker. Vi trenger dessuten mer innsikt i hvordan dagens multilaterale system fungerer på ulike felt. Norge kan og bør bidra til det globale fellesgodet som denne typen kunnskap utgjør. Abstract in EnglishBetween Politics and Statistics: Global Collective Goods and Development PolicyThe adoption of the Sustainable Development Goals has revived some classical issues in development policy: Who should pay for global collective goods? Can foreign aid be used for this purpose, or should such financing be reserved for efforts in specific poor countries? In this article we investigate how the members of the Development Assistance Committee of the OECD, collectively as well as individually, approach these questions. We find that they struggle to be consistent. In our opinion, the Norwegian government could gain from developing a better conceptualisation of global collective goods. This will first of all make it easier to have a consistent policy with respect to financing them. Secondly, such a conceptualisation will allow for a more strategic approach to new initiatives. Going forward, aid budgets are unlikely to grow much. Moreover, theory demonstrates that it is in general optimal to tailor the provision of different collective goods to the peculiarities of each case. This implies that expertise is essential. We need a better understanding of the functioning of existing multilateral organisations and mechanisms that manage both aid and global collective goods. In addition, more knowledge about the workings of the current multilateral system in different fields is required. Such knowledge is a global collective good and Norway could and should contribute to its provision.
We study a model where two parties, one from the left and one from the right, compete for position. The election is to be held in the near future and the outcome is uncertain. Prior to the election, the members of both parties nominate their prime ministerial candidates. Investors care about the outcome since they may invest in irreversible domestic production capital. We find that there is political convergence in the nomination process. In some circumstances, it is only the median voter of the left-wing party that elects a more moderate candidate. In other instances, the members of both parties nominate more "conservative" candidates, but there is still convergence. We also show that a higher probability of the left winning the election increases the degree of convergence, while a more globalised economy (greater capital mobility) reduces it.
The Highly Indebted Poor Countries (HIPC) initiative is the largest multilateral effort aimed at providing debt relief. In this essay, we address the question of whether this program is consistent with a view of justice commonly known as liberal egalitarianism. We argue that the HIPC initiative violates two basic liberal egalitarian principles. More generally, we show why the debate on debt relief must move beyond a discussion of whether or not countries should be held responsible for their sovereign debt. We urge a more careful and broader classification of which of the factors affecting a country's situation it should be held responsible for and which it should not. While there are good arguments for sometimes not holding poor countries responsible for their sovereign debt, it is hard to see why the same arguments should not also apply to many other factors that affect a country's net disposable income.
The Highly Indebted Poor Countries (HIPC) initiative is the largest multilateral effort aimed at providing debt relief. In this essay, we address the question of whether this program is consistent with a view of justice commonly known as liberal egalitarianism. We argue that the HIPC initiative violates two basic liberal egalitarian principles. More generally, we show why the debate on debt relief must move beyond a discussion of whether or not countries should be held responsible for their sovereign debt. We urge a more careful and broader classification of which of the factors affecting a country's situation it should be held responsible for and which it should not. While there are good arguments for sometimes not holding poor countries responsible for their sovereign debt, it is hard to see why the same arguments should not also apply to many other factors that affect a country's net disposable income. Adapted from the source document.
