Publication: Exiting a Lawless State
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Date
2008
ISSN
00130133
Published
2008
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An earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset-stripping and the prevalence of asset-stripping led to the absence of a demand for the rule of law, highlighting a coordination failure. This article looks more carefully at the dynamics of transition from a non-rule-of-law state. The article identifies a commitment problem as the critical feature inhibiting the transition: the inability, under a rule of law, to forgive theft. This can lead to the perpetuation of the non-rule-of-law state, even when it might seem that the alternative is Pareto-improving.
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Publication Exiting a Lawless State(World Bank, Washington, DC, 2008-02)An earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset-stripping, and the prevalence of asset-stripping led to the absence of a demand for the rule of law, highlighting a coordination failure. This paper looks more carefully at the dynamics of transition from a non-rule-of-law state. The paper identifies a commitment problem as the critical feature inhibiting the transition: the inability, under a rule of law, to forgive theft. This can lead to the perpetuation of the non-rule-of-law state, even when it might seem that the alternative is Pareto-improving.Publication The Worldwide Governance Indicators: Six, One, or None?(2010)Aggregate indexes of the quality of governance, covering large samples of countries, have become popular in comparative political analysis. Few studies examine the validity or reliability of these indexes. To partially fill this gap, this study uses factor, confirmatory factor and path analysis to test both measurement and causal models of the six Worldwide Governance indicators. They purportedly measure distinct concepts of control of corruption, rule of law, government effectiveness, rule quality, political stability, and voice and accountability. Rather than distinguishing among aspects of the quality of governance, we find that they appear to be measuring the same broad concept.Publication Response to 'What Do the Worldwide Governance Indicators Measure?'(2010)Thomas (2009) dismisses the Worldwide Governance Indicators (WGI) as an 'elaborate and unsupported hypothesis' because of the failure to demonstrate the 'construct validity' of these indicators. We argue that 'construct validity' is not a useful tool to assess the merits of the WGI, and even if it were, Thomas provides no evidence of any practical consequences of failure to meet the criteria of construct validity.Publication Turnover in Power as a Restraint on Investing in Influence: Evidence from the Postcommunist Transition(2010)We develop and implement a method for measuring the frequency of changes in power among distinct leaders and ideologically distinct parties that is comparable across political systems. We find that in the postcommunist countries, more frequent changes in power in the early years of transition are associated with better governance in the later years. The results are consistent with the hypothesis that more frequent turnover in power lowers the returns to firms seeking to buy political influence: i.e,. that government turnover serves as a restraint on investing in influence regardless of the ideology of the government.Publication Changes in Subjective Well-Being in Timor-Leste on the Path to Independence(2009)In countries emerging from ethnic and civil conflict, standard approaches to measuring trends in well-being do not account for the empowerment of the population due to the political liberalization, which is critical for the successful implementation of zero-generation reforms. They also fail to do justice to the often massive population displacement unleashed by the violence which makes a comparison of living standards from before to after the conflict problematic. Using the example of Timor-Leste, this paper demonstrates how subjective, objective, and recall information collected through a cross-sectional household survey can be combined to provide a rich profile of trends in well-being from the pre- to post-conflict stage. By differencing across pre- and post-conflict periods, the regression estimates are robust with regard to psychological attributes or other time-invariant personal traits. The analysis shows that the changes in self-rated welfare and power in Timor-Leste broadly corresponded to changes recorded by objective indicators of economic resources, economic shocks, and ethno-linguistic status.
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