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Relative Political Capacity: New Models & Data Updates. Marina Arbetman Rabinowitz Kristin Johnson. Indicators of Political Development. Indicators of Well being :

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Relative political capacity new models data updates

Relative Political Capacity: New Models & Data Updates

Marina Arbetman Rabinowitz

Kristin Johnson

Claremont Conference on Political Economy Indicators


Indicators of political development
Indicators of Political Development

  • Indicators of Well being:

    Electricity, calories per capita, education, health, etc. Deutsch (1966), Rokkan (1970), Gurr (1974), World Handbook of Social Indicators (WB), Human Development Index (UN), Millennium Development Goals.

  • Democracy Research:

    Participation, representation, electoral choice, institutions, bureaucracy (Campbell, Converse, Stokes and Miller, 1960; Verba, Nie and Petrocik, 1972; and Fiorina, 1981). Freedom House Index, Polity IV (democracy/ autocracy), Governance Indicators.

Claremont Conference on Political Economy Indicators


Theoretical issues
Theoretical issues

These approaches each fall into the trap of measuring the consequences or reflecting phenomena other than capabilities but have the advantage of measuring the phenomena directly.

  • Measures of well being reflect government and elite choice in resource allocation

  • Measures of governance favor democratic systems of government over other forms of governance.

Claremont Conference on Political Economy Indicators


Relative political capacity
Relative Political Capacity

Measures the discretionary power of the government to implement a desired policy.

The Relative Political Capacity of a government is the ratio of revenues a government extracts, compared to predicted levels a society could attain based on economic endowment.

RPC = Actual Government Revenue

Predicted Government Revenue

Claremont Conference on Political Economy Indicators


Relative political capacity1

Predicted

RATIO OF

Performance

REVENUE

Boundary of High

TO GDP

Performance

Successful

States

Fragile States

Boundary of Low

Performance

Poor

Developing

Developed

Relative Political Capacity

Claremont Conference on Political Economy Indicators


Examples rpc across time
Examples: RPC across time

Bolivia

High RPC

Thailand

Botswana

Angola

1960

1980

1960

2000

1970

1980

1990

2005

1990

1970

2000

2005

1990

1990

1970

2000

1960

1970

1980

2005

1980

2000

Low RPC

2005

2000

4000

6000

8000

0

GDP per Capita

Claremont Conference on Political Economy Indicators


Rpc 2000

Lesotho

Brazil

Hungary

Israel

Sweden

positive

Portugal

Burkina Faso

Austria

Barbados

Tunisia

Poland

Ecuador

New Zealand

Denmark

Uruguay

Kenya

Finland

Morocco

Malta

Greece

Singapore

Papua New Guinea

USA

RPC

0

Indonesia

South Korea

Jordan

Fiji

Malaysia

Sri Lanka

Thailand

Bolivia

Philippines

Mauritius

Iran

Argentina

Kuwait

Gabon

Bangladesh

negative

Paraguay

Haiti

Myanmar

0

40,000

Income

RPC 2000

Claremont Conference on Political Economy Indicators


Rpe general model
RPE General Model

Yit = α + β Xit + Vr

Yit = Adjusted tax revenue for country i at time t

X it = Vector of variables that determine potential tax collection

Vr= White noise disturbance

Claremont Conference on Political Economy Indicators


Inter country comparisons models for developing societies
Inter country comparisons:Models for Developing Societies

Model 1:

Tax/Gdp= α + β1 time - β2 min/gdp + β3 gdpCap + β4 exports/gdp + β5 Oil + ξ

Tax= (TaxRev-NonTax-SocSec)/Gdp

RPC1 = Real /Predicted

Note: Control for expenditures

Model 2:

Tax/Gdp= α + β1 time - β2 min/Gdp + β3 agr/Gdp + β4 exports/Gdp + β5 Oil + ξ

Tax= (TaxRev-NonTax-SocSec)/Gdp

RPC2 = Real /Predicted

Claremont Conference on Political Economy Indicators


Inter country comparisons models for developed societies
Inter country comparisons:Models for Developed Societies

Model 3:

Tax/Gdp= α + β1 time - β2 min/gdp + β3 gdpCap + β4 Exports/gdp + β5 health/gdp + ξ

Tax= (TaxRev-NonTax-SocSec)/Gdp

RPC3 = Real /Predicted

Claremont Conference on Political Economy Indicators


Empirical inventory
Empirical Inventory

  • National Level model

  • Unit of analysis: country

  • Number of countries in the sample: 129

  • Time span: 1960-2005

  • Notes: Sample includes Poland 86-on, Hungary 89-on, Romania 88 on. These countries use NMP in their National Accounts before those dates so the data is not comparable to GNP/GDP methodology). The sample includes China.

Claremont Conference on Political Economy Indicators


Variables sources
Variables & Sources

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Data collection issues
Data Collection Issues

  • Data relies on national government accounts

  • Variances in tax reporting and accounting are noted by IMF or WB, in most cases.

  • Currency changes and differences in reporting timing in high inflation situations need to be normalized.

  • National sources may be necessary to supplement

Claremont Conference on Political Economy Indicators


Measurement conceptualization
Measurement & Conceptualization

  • Health expenditures: before 1990s mostly government reported public expenditures, now private are part of the mix in both developed and developing but not always reported

  • Social Security: 1) some countries have privatized part of SS.

    2) The argument to exclude social security has been that those transfers have been allocated previous to the collection and therefore there is little room for any further manipulation by the government. This is not the case, those funds are not untouchable, and the deficit can be manipulated by Central Banks or Congress

  • Agriculture: Still our best empirical fit for developing countries (not for developed) but 1960s is the anchor so we need to control for time.

  • Taxation: Indirect vs. direct taxation

Claremont Conference on Political Economy Indicators


Sub national models
Sub National Models

Yit = α + β Xit + Vr

Yit = Adjusted tax revenue for country i at time t

X it = Vector of variables that determine potential tax collection

Vr= White noise disturbance

  • Conceptually, the same model as national level.

  • Constraints to choosing the variables are country specific

Claremont Conference on Political Economy Indicators


Relative provincial political capacity rppc
Relative Provincial Political Capacity (RPPC)

Model 1:

Transf/gdp = α + β1 time + β2 min/gdp + β3 agr/gdp + β4 rev/gdp + ξ

Model 2:

Transf/gdp= α + β1 time + β2 gdpCap+ β3 rev/gdp+ β4 min/gdp + ξ

Model 3:

Rev/gdp= α + β1 time + β2 transf/gdp+ β3 agr/gdp + β4 min/gdp + + β5 Subsidies+ ξ

Claremont Conference on Political Economy Indicators


Empirical inventory1
Empirical Inventory

  • Sub National Level Model

  • Unit of analysis: province/state/region

  • Time span:Ideally 1990 – 2005, dependant on individual country

  • Bolivia, Brazil, China, EU, India, Indonesia, Iran, Mexico, Nigeria, Thailand, Sudan, USA,

Claremont Conference on Political Economy Indicators


Data collection
Data Collection

  • In many countries the transfers are decided according to a Congressional Allocation Funds formula. If the allocations are decided on annual negotiations (1), the variable captures the concept of RPPC. If the formula is inflexible (2), the flexibility comes from the allocation of central government expenditures to the provinces.

  • It is also important to know that the General Appropriation Act does not show if or how much of the money is released, so instead of following to entry number (Transfers, Subsidies. Models 1& 3) in some cases is better to look at the exit number (Expenditures. Model 2)

Claremont Conference on Political Economy Indicators


Variables rppc
Variables: RPPC

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Sources examples rppc
Sources Examples: RPPC

Claremont Conference on Political Economy Indicators


Applications
Applications

  • International Conflict

    • Organski & Kugler 1980; Lemke 1996; Tammen et al 2002.

  • Internal Conflict

    • Kugler et al 1997; Benson & Kugler 1998; Johnson 2007.

  • Demographic Transitions

    • Arbetman, Kugler & Organski 1980, 1994, 1999; Feng Kugler & Zak 2000, 2007.

  • Economic Applications

    • Exchange Rates: Arbetman 1990; Growth: Leblang 1997; Inflation: Alcazar 1997; Private Investment: Feng & Chen 1997, Feng 2004; Policy Implementation: Snider 1997; Informal Markets: Arbetman 1990, 1994; Arbetman & Ghosh 1997.

  • Sub National

    • Rouyer 1997; Swaminanthan 2005; 2007; Johnson 2007.

Claremont Conference on Political Economy Indicators


Relative political capacity2

+

Very High

High

Average

Predicted Performance

Low

Very Low

_

Poor

Developing

Developed

Relative Political Capacity

RPC at different levels of development

Claremont Conference on Political Economy Indicators


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