Browsing by Author "Kuran, Timur"

This thesis is comprised of three chapters on different challenges state-builders face when creating an effective state apparatus. When principals (such as authoritarian leaders or elected representatives) set up security organs, they must make officials in the security services overcome collective action problems to maintain security. However, the achieved cooperation can also undermine state security by generating the potential for agency problems such as collusion and treason. Thus, leaders must balance their efforts to empower collective action among security officials while managing this principal-agent problem and undermining adverse collective action. The chapter "Fending Off Shield and Sword: How Strategic Purges of State Security Personnel Protect Dictators" focuses on the strategic use of purges by leaders to undermine adverse collective action among officials. I test the theory that leaders purge according to factional ties to undermine collective action on the case of the Stalinist purges of the Soviet secret police using individual-level career data. Extant conflicts and social cleavages often shape how states expand power to the periphery. The chapter “How Settlement and Inter-Ethnic Conflict Over Property Rights Shapes State Capacity” focuses on Japanese-led state-building in Manchuria. I examine the strategies that states utilize in expanding state capacity through exploiting ethnic conflicts and cleavages between its subjects, finding that conflict can induce cooperation with state-building efforts from some groups but not others, due to different incentives arising from conflicting property rights institutions. I also address the trade-offs between deploying coercion and building infrastructural power, such as the adverse effects of repression on the state’s ability to administer and obtain information about its population. To highlight this tradeoff, my dissertation chapter titled “How Repression Undermines Infrastructural Power” shows that repression by police forces retards their ability to ascertain accurate information about the population. This relationship is tested by analyzing the legacies of arbitrary Chinese repressions against Korean settlers in warlord-era Manchuria. There is a strong relationship between anti-Korean repression and lower state capacity in the subsequent period, and police literacy data suggests this is partly driven by the inability to recruit quality candidates.

This dissertation consists of three essays pertaining to the political economy of authoritarian rule. The first essay contributes a missing piece to the puzzle of the "Great Divergence" between Western Europe and East Asia by investigating the regularity of imperial cycles in East Asia. Combining game-theoretic arguments and historical analysis, it traces the region's authoritarian roots to structural asymmetries and the resulting millennial interactions between the nomadic and sedentary polities that give rise to bureaucratic empires in China. The second essay investigates the logic underlying revolutions and the consequences of authoritarian control. Through decision-theoretic models highlighting the micro-motives of revolutionary participation and the potentially nonlinear characteristics of revolutionary processes, it demonstrates the limitations and paradoxical effects of authoritarian control as manifested through its inter-temporal trade-offs, knowingly or unknowingly faced by an autocrat with bounded rationality and limited foresight. The third essay blends theories of international relations and comparative political economy by studying crisis bargaining under power asymmetry and connecting it to authoritarian politics. Framing intra-elite power-sharing and regional contentious politics under authoritarianism as crisis bargaining in a weak institutional environment, it reveals an overlooked mechanism through which the weak may offset power asymmetry in bargaining against the strong. This mechanism helps explain elite-led mass movements and within-regime variations of contentious politics under authoritarian rule.

This dissertation studies the political economy of city status and its historical role in promoting development. The status of a city was a set of political institutions that altered the governance of towns it was bestowed upon, making towns into cities and townsmen into citizens. The three essays of this dissertation explore why and how alternative city-level political institutions may result in different development outcomes, and how individuals may dynamically interact with and respond to political institutions. I highlight the role of the distribution of political power between the landed and the urban elites as key to understanding the consequences of city status. In this dissertation, I utilize a variety of methods such as archival research, game-theoretic modeling, historical and qualitative analysis, case studies, geographic information system mapping as well as econometric analysis.

In Chapter 2, I develop a formal model of city formation with political control by landed or urban elites. I show how technological limitations faced by the landed elites, a result of their dependence on the scarcely available land as a production input, constrain optimal allocation decisions for employing complementary production inputs, labor, and productive public goods. The model predicts that political control by landed elites will result in cities with a smaller equilibrium population size and with fewer public goods being provided.

In Chapter 3, I argue that institutions privileging urban at the expense of landed elites may generate better outcomes even in the absence of democracy and may actually outperform democracy if it leads to political control by landed elites. Using original town-level data, I draw on evidence from an 1869 city reform in Congress Poland which deprived three-quarters of the 452 cities of their city status, giving political rights to landed but not urban elites. I show that degraded cities experienced a 64 percentage points slower population growth over the next 40 years. City status was associated with greater public goods provision and more effective judiciary in remaining cities and contributed to a relative agrarianization of degraded cities. I discuss implications for our understanding of the role of inclusive institutions in promoting development.

Chapter 4 explores how individuals may contest unfavorable formal institutions, resulting in the development of norms that directly counter these institutions. The theoretical framework developed in this chapter serves to provide an explanation for how formal institutions may persist even long after their demise, and why the direction of this persistence does not need to replicate equilibria that formal institutions were meant to sustain. To investigate this empirically, I study the long-term effects of the 1869 city reform to show how formal city-level institutions that have been unfavorable to entrepreneurship have led to the development of strong pro-entrepreneurship norms that have persisted until the present and make the populations of towns with previously unfavorable institutions more entrepreneurial now.

This dissertation seeks to advance our understanding of the roles that institutions play in economic development. How do institutions evolve? What mechanisms are responsible for their persistence? What effects do they have on economic development?

I address these questions using historical and contemporary data from Eastern Europe and Russia. This area is relatively understudied by development economists. It also has a very interesting history. For one thing, for several centuries it was divided between different empires. For another, it experienced wars and socialism in the 20th century. I use some of these exogenous shocks as quasi-natural social experiments to study the institutional transformations and its effects on economic development both in the short and long run.

This first chapter explores whether economic, social, and political institutions vary in their resistance to policies designed to remove them. The empirical context for the analysis is Romania from 1690 to the 2000s. Romania represents an excellent laboratory for studying the persistence of different types of historical institutional legacies. In the 18th and 19th centuries, Romania was split between the Habsburg and Ottoman Empires, where political and economic institutions differed. The Habsburgs imposed less extractive institutions relative to the Ottomans: stronger rule of law, a more stable and predictable state, a more developed civil society, and less corruption. In the 20th century, the Romanian Communist regime tried deliberately to homogenize the country along all relevant dimensions. It was only partially successful. Using a regression discontinuity design, I document the persistence of economic outcomes, social capital, and political attitudes. First, I document remarkable convergence in urbanization, education, unemployment, and income between the two former empires. Second, regarding social capital, no significant differences in organizational membership, trust in bureaucracy, and corruption persist today. Finally, even though the Communists tried to change all political attitudes, significant discontinuities exist in current voting behavior at the former Habsburg-Ottoman border. Using data from the parliamentary elections of 1996-2008, I find that former Habsburg rule decreases by around 6 percentage points the vote share of the major post-Communist left party and increases by around 2 and 5 percentage points the vote shares of the main anti-Communist and liberal parties, respectively.

The second chapter investigates the effects of Stalin’s mass deportations on distrust in central authority. Four deported ethnic groups were not rehabilitated after Stalin’s death; they remained in permanent exile until the disintegration of the Soviet Union. This allows one to distinguish between the effects of the groups that returned to their homelands and those of the groups that were not allowed to return. Using regional data from the 1991 referendum on the future of the Soviet Union, I find that deportations have a negative interim effect on trust in central authority in both the regions of destination and those of origin. The effect is stronger for ethnic groups that remained in permanent exile in the destination regions. Using data from the Life in Transition Survey, the chapter also documents a long-term effect of deportations in the destination regions.

The third chapter studies the short-term effect of Russian colonization of Central Asia on economic development. I use data on the regions of origin of Russian settlers and push factors to construct an instrument for Russian migration to Central Asia. This instrument allows me to interpret the outcomes causally. The main finding is that the massive influx of Russians into the region during the 1897-1926 period had a significant positive effect on indigenous literacy. The effect is stronger for men and in rural areas. Evidently, interactions between natives and Russians through the paid labor market was an important mechanism of human capital transmission in the context of colonization.

The findings of these chapters provide additional evidence that history and institutions do matter for economic development. Moreover, the dissertation also illuminates the relative persistence of institutions. In particular, political and social capital legacies of institutions might outlast economic legacies. I find that most economic differences between the former empires in Romania have disappeared. By the same token, there are significant discontinuities in political outcomes. People in former Habsburg Romania provide greater support for liberalization, privatization, and market economy, whereas voters in Ottoman Romania vote more for redistribution and government control over the economy.

In the former Soviet Union, Stalin’s deportations during World War II have a long-term negative effect on social capital. Today’s residents of the destination regions of deportations show significantly lower levels of trust in central authority. This is despite the fact that the Communist regime tried to eliminate any source of opposition and used propaganda to homogenize people’s political and social attitudes towards the authorities. In Central Asia, the influx of Russian settlers had a positive short-term effect on human capital of indigenous population by the 1920s, which also might have persisted over time.

From a development perspective, these findings stress the importance of institutions for future paths of development. Even if past institutional differences are not apparent for a certain period of time, as was the case with the former Communist countries, they can polarize society later on, hampering economic development in the long run. Different institutions in the past, which do not exist anymore, can thus contribute to current political instability and animosity.

As people become increasingly accessible to economic statistics, data manipulation occurs more often across regions, among countries with or without democratic institutions, and at different levels of governments. The governments release the better-looking falsified data in exchange for higher public evaluation on governmental performances, and thereby gain higher social support or stability. This paper explores the political effect, to be specific, the effect on state-society relationship of economic data manipulation using the case of Chinese protests from 1995 to 2013. The paper first provides some evidence for China's local GDP falsification. Then, by comparing the influence of reported GDP growth and that of actual economic growth on protests in China's provinces, I find that while actual growth has a consistent negative correlation with the number of protests, the reported data has little effect. The result holds under a series of robustness checks. It implies that citizens are able to interpret economic performances through their feeling for financial status, and that falsified economic data does not help alleviate their grievances during economic downturn.

This dissertation puts forward a novel theory of imperfect economic information to understand the determinants of high income earners' support for tax and transfer policies. Although the notion that voters are poorly informed is now a central element of the scholarly heritage of political science, the implications of economic illiteracy of individuals is seldom a consideration in the models of redistributive preferences. Most accounts assume, incorrectly, that people use factual information about income inequality and their position in the income distribution in determining expected benefits and losses from prospective taxation. This project challenges the common perfect information assumption. I thus investigate the micro-mechanisms through which high-income individuals make decisions about welfare policies in the absence of perfect information.

I argue that individuals use social comparison and cognitive heuristics when they lack precise knowledge of the extent of economic inequality and their position on the income ladder. These generated perceptions, in return, form the basis of their calculation of potential benefits and losses due to tax policies. I make several contributions. First, I develop a theoretical model and show empirically that individuals perceiving a significant income gap between themselves and high-income earners are more likely to support higher tax rates. Second, through analyzing survey data, I find ample evidence suggesting that the amount and substance of information available to individuals may be more important than the actual data in predicting and shaping political behavior. Remarkably, my results evince that individuals tend to judge the level of inequality proportionally to the degree of inequality they perceive. I further demonstrate that the effect of misperceptions on one's willingness to contribute to the welfare system depends on the political institutions that control the amount and scope of information available to their citizens. Finally, my analysis of the preferences of Ottoman elites reveals an example for this phenomenon. I find that in authoritarian settings in which class differences are very institutionalized, there are no informational asymmetries. In such cases, decisions of the elite are not affected by distributional misperceptions, and they are predominantly governed by material self interest considerations.

It is a fundamental assertion in political science that political parties in government allocate resources disproportionately to benefit the people who have voted for them and for projects that push forward their political agenda. However, this literature ignores the structural (network) limitations of policy making. By creating a new network model which depicts the structure and growth of loosely coupled religious organizations, I create a taxonomy of religious denominations and examine how their network structure affects their likelihood of receiving government support. I test this relationship empirically in the United States and Israel. In the United States, I examine President Bush’s Faith Based Initiative, which was expected to channel government funding mostly to conservative, white, southern churches. In Israel, I research the education systems of the different religious sectors and how much government support they receive, the common belief being that the ultra-orthodox receive the most. Using network modeling, formal modeling and instrumental variable analysis, I show that despite expectations, in the United States conservative congregations did not receive more funding and in Israel not all ultra-orthodox networks receive high levels of support. The significant predictor, in both cases, for receiving funding is the network structure of the denominations, where more hierarchical denominations are more likely to receive funding than those organized in a dispersed network structure.

This dissertation is comprised of three essays on the political economy of the Philippines. It combines a variety of methods---historical and qualitative analysis, interviews, and statistical analysis---to examine various aspects of the interaction of politics and economics in the country. The first chapter examines the relationship between horizontal political dynasties and economic outcomes. I argue that horizontal dynasties---more than one member of a political family holding office simultaneously---allow members of the dynasties to coordinate over policy by circumventing veto points in the policy processes. This leads to higher spending on public goods. I further show that this increase in spending is not associated with improved development, suggesting that the increased spending is used inefficiently. The second chapter examines the interaction of rank and gender norms in dynastic politics. I argue that male candidates are more likely to replace higher ranking female, candidates, but the inverse is not true. This rationalizes existing strategies by dynasties such as benchwarming. The third chapter argues for the positive long-run effect of the colonial Catholic mission. Municipalities that had a colonial mission are more developed and have higher levels of state capacity today. This is because missions functioned as de facto states and vehicles for the establishment of local government. This chapter emphasizes that missions were not merely religious or educational institutions but vehicles for governance.