This paper formalizes ideas from classical and radical political economy on task allocation and technology adoption under capitalism. A few previous studies have attempted this, but the framework and results in this paper are different. I model labor contracts that are incomplete owing to unforeseen/indescribable contingencies, leading to Pareto-improving renegotiation and a hold-up problem. Given path dependence, the allocation is sub-optimal, with the extent of inefficiency depending upon the degree of incompleteness. This model captures insights from the above literature on the microeconomic roots of inefficiency and power. It also provides a concrete setting where indescribable contingencies do (or don't) matter - a much-debated issue.
The need to understand regional variation in politics and political economy, and how these have contributed to different developmental outcomes across various parts of India, remains pressing. It was suggested in the early 1960s that in India the central government was largely under the control of a national capitalist class, while the states were dominated by landed interests. Does such a formulation hold ground today? With increasing political mobilization among lower classes and castes and the diffusion of economic power to the state level after the reforms, how can variation in regional development be characterized? This volume aims to answer these questions by studying aspects of macro-economy, land, labour and employment from a variety of analytical and disciplinary perspectives. It offers rich analyses of economic growth viewed through the lenses of caste, regional politics and public investment, while also looking at long-term trends in employment and wages in the public sector, and the consequences of legal and policy reform.
This article discusses credit and marketing arrangements for small farmers in developing countries. The authors draw on the mixed experience with agricultural cooperatives in developing countries to present the design of a credit and marketing cooperative. The authors argue that in conjunction with other state policies, this arrangement works better for small farmers than other alternatives, in particular corporate ones.
PurposeTo formalize and test the hypotheses that economic and political inequality tend to lower the quality of public education and thereby the overall quality of education in developing countries.Design/methodology/approachThe paper uses both international cross‐section data and panel data from almost 100 countries to test these hypothesized effects of the two types of inequality on educational quality. Three different indicators of school quality, all at the primary level, are used. The paper tests the robustness of the findings to different estimation methods, specifications and the use of instruments for a potentially endogenous variable.FindingsThere is clear empirical support for the hypothesized negative effects of political inequality and ethnic fragmentation on educational quality. The evidence for the hypothesized effect of income inequality, however, is very weak at best.Research limitations/implicationsThe educational quality measures are crude and the analysis is at the country level. Future work can use more direct, achievement‐based measures of quality and data at the district or county levels.Practical implicationsRedistribution of income and democratization can have beneficial effects on educational quality.Originality/valueThe paper provides a theoretical model that formalizes the hypothesis that economic and political inequality can lower the quality of public education and thereby the overall quality of education. It empirically tests this model using panel and cross‐sectional data.
