-

Seema Jayachandran is an assistant professor in the Department of Economics at Stanford University. She is also a Faculty Research Fellow at the National Bureau of Economic Research (NBER), and a Research Affiliate of the Bureau for Research and Economic Analysis of Development (BREAD), Centre for Economic Policy Research (CEPR), and Stanford Center for International Development (SCID).

Her research focuses on microeconomic issues in developing countries, including health, education, labor markets, and political economy. Her work has been published in the American Economic Review ("Odious Debt," on sovereign debt incurred by dictators), Journal of Political Economy ("Selling Labor Low," on labor market risk in India), and the Quarterly Journal of Economics ("Life Expectancy and Human Capital Investments," on increased education caused by declines in maternal mortality in Sri Lanka), and other journals.

Her current projects are based in India, Nepal, and Zimbabwe. She also works on social issues in the United States. Previously she was a Robert Wood Johnson Scholar in Health Policy Research at the University of California, Berkeley. She also worked as a management consultant with McKinsey & Company in San Francisco. She earned a PhD and master's degree from Harvard University, a master's degree from the University of Oxford where she was a Marshall Scholar, and a bachelor's degree from MIT.

Seminar summary:

Seema Jayachandran's presentation focused on the problem of what to do about "odious debt" -- that is, debt lent to rogue regimes that ultimately must be borne and paid by successive (legitimate) governments. She asks to what extent the status quo can change so that lenders will not want to lend to illegitimate governments. Her solution lies in increasing the costs of lending to rogue regimes through a policy of loan sanctions. Adopting an ex ante posture, Jayachandran argues that interests rates for loans would move toward infinity if banks knew that future legitimate governments would repudiate the debts of past regimes, particularly if new governments would have the blessing of the international community to do so. The loan-sanctions solution addresses a challenge faced by the debt relief movement, which focuses on debt "overhang," which weakens a poor country's economy. Instead, loan sanctions focus on the notion that some debt is, simply, illegitimate. And while trade sanctions pose problems (Jayachandran mentions that trade sanctions are often easy to evade and hurt people more than government), loan sanctions prevent a sanctioned government from borrowing. Loan sanctions are also self- enforcing (e.g., a lender would not lend if that lender knew it was unlikely to be repaid). The author raised questions for debate about who or what international body would implement loan sanctions or policy, the problem of banks making short-term loans to dictators who pay, and defining bad behaviors narrowly (or broadly) enough so as to target rogue or illegitimate regimes.

Encina Ground Floor Conference Room

Seema Jayachandran Assistant Professor of Economics Speaker Stanford Univesity
Seminars
Authors
Larry Diamond
News Type
Commentary
Date
Paragraphs
Bush gave democracy promotion a bad name, Larry Diamond writes in Newsweek. The new administration needs to get it right.

The new U.S. President will face more than one kind of global recession. In addition to the economic downturn, the world is suffering a democratic contraction. In Russia, awash with oil money, Vladimir Putin and his KGB cronies have sharply restricted freedom. In Latin America, authoritarian (and anti-American) populism is on the rise. In Nigeria, the Philippines and once again in Pakistan, democracy is foundering amid massive corruption, weak government and a loss of public faith. In Thailand, the government is paralyzed by mass protests. In Africa, more than a dozen fragile democracies must face the economic storm unprepared. And in the Middle East—the Bush administration's great democratic showcase—the push for freedom lies in ruins.

In the past decade, the breathtaking democratic wave that swept the world during the final quarter of the 20th century reversed course. Making democracy work proved harder than bringing down authoritarian rule. And receptive peoples everywhere were alienated by the arrogance and unilateralism of President George W. Bush's approach, which associated "democracy promotion" with the use of force and squandered America's soft power. Advancing democracy abroad remains vital to the U.S. national interest. But the next president will have to craft a more modest, realistic and sustainable strategy.

It's easy today to forget how far freedom has advanced in the past 30 years. When the wave of liberation began in 1974 in Portugal, barely a quarter of the world's states met the minimal test of democracy: a place where the people are able, through universal suffrage, to choose and replace their leaders in regular, free and fair elections. Over the course of the next two decades, dictatorships gave way to freely elected governments first in Southern Europe, then in Latin America, then in East Asia. Finally, an explosion of freedom in the early '90s liberated Eastern Europe and spread democracy from Moscow to Pretoria. Old assumptions—that democracy required Western values, high levels of education and a large middle class—crumbled. Half of sub-Saharan Africa's 48 states became democracies, and of the world's poorest countries, about two in every five are democracies today.

This great shift coincided with an unprecedented moment of U.S. military, economic and cultural dominance. Not only was America the world's last remaining superpower, but U.S. values—individual freedom, popular sovereignty, limited government and the rule of law—were embraced by progressive leaders around the world. Opinion surveys showed democracy to be the ideal of most people as well.

In recent years, however, this mighty tide has receded. This democratic recession has coincided with Bush's presidency, and can be traced in no small measure to his administration's imperial overreach. But it actually started in 1999, with the military coup in Pakistan, an upheaval welcomed by a public weary of endemic corruption, economic mismanagement and ethnic and political violence. Pakistan's woes exposed more than the growing frailty of a nuclear-weapon state. They were also the harbinger of a more widespread malaise. Many emerging democracies were experiencing similar crises. In Latin America and the post-communist world, and in parts of Asia and Africa, trust in political parties and parliaments was sinking dramatically, as scandals mounted and elected governments defaulted on their vows to control corruption and improve the welfare of ordinary people.

Thanks to bad governance and popular disaffection, democracy has lost ground. Since the start of the democratic wave, 24 states have reverted to authoritarian rule. Two thirds of these reversals have occurred in the past nine years—and included some big and important states such as Russia, Venezuela, Bangladesh, Thailand and (if one takes seriously the definition of democracy) Nigeria and the Philippines as well. Pakistan and Thailand have recently returned to rule by elected civilians, and Bangladesh is about to do so, but ongoing crises keep public confidence low. Democracy is also threatened in Bolivia and Ecuador, which confront rising levels of political polarization. And other strategically important democracies once thought to be doing well—Turkey, South Africa and Ukraine—face serious strains.

This isn't to say there haven't been a few heartening successes in recent years. Indonesia, the world's most populous Muslim country, has become a robust democracy nearly a decade after its turbulent transition from authoritarian rule. Brazil, under the left-leaning Luiz Inácio Lula da Silva, has also strengthened its democratic institutions while maintaining fiscal discipline and a market orientation and reducing poverty. In Africa, Ghana has maintained a quite liberal democracy while generating significant economic growth, and several smaller African countries have moved in this direction.

But the combination of tough economic times, diminished U.S. power and the renewed energy of major authoritarian states will pose a stiff challenge to some 60 insecure democracies in Asia, Africa, Latin America and the former Soviet bloc. If they don't strengthen their political institutions, reduce corruption and figure out how to govern more effectively, many of these democracies could fail in the coming years.

Part of the tragedy is that Washington has made things worse, not better. The Bush administration was right that spreading democracy would advance the U.S. national interest—that truly democratic states would be more responsible, peaceful and law-abiding and so become better contributors to international security. But the administration's unilateral and self-righteous approach led it to overestimate U.S. power and rush the dynamics of change, while exposing itself to charges of hypocrisy with its use of torture and the abuse of due process in the war on terror. Instead of advancing freedom and democracy in the Middle East, 2005 and 2006 witnessed a series of embarrassing shocks: Hamas winning in the Palestinian territories and Islamist parties winning in Iraq; Hizbullah surging in Lebanon and the Muslim Brotherhood surging in Egypt. After a brief moment of optimism, the United States backed away and Middle Eastern democrats grew embittered.

The new American administration will have to fashion a fresh approach—and fast. That will mean setting clear priorities and bringing objectives into alignment with means. The United States does not have the power, resources or moral standing to quickly transform the world's entrenched dictatorships. Besides, isolating and confronting them never seems to work: in Cuba, for example, this policy has been a total failure. This does not mean that the United States should not support democratic change in places like Cuba, Burma, Iran and Syria. But it needs a more subtle and sophisticated approach.

The best strategy would be to open up such places to the freer flow of people, goods, ideas and information. The next administration should therefore start by immediately lifting the self-defeating embargo on Cuba. It should offer to establish full diplomatic ties with Havana and free flows of trade and investment in exchange for a Cuban commitment to improve human rights. Washington should also work with Tehran to hammer out a comprehensive deal that would lift economic sanctions, renounce the use of force to effect regime change and incorporate Iran into the WTO, in exchange for a verifiable halt to nuclear-weapons development, more responsible behavior on Iraq and terrorism, and improved human-rights protection and monitoring. Critics will charge that talking to such odious governments only legitimizes them. In fact, engaging closed societies is the best way to foster democratic change.

At the same time, the United States should continue to support diaspora groups that seek peaceful democratic change back home, and should expand international radio broadcasting, through the Voice of America and more specialized efforts, that transmits independent news and information as well as democratic values and ideas.

In the near term, however, Washington must focus on shoring up existing democracies. Fragile states need assistance to help them adjust to the shocks of the current economic crisis. But they also need deep reforms to strengthen their democratic institutions and improve governance. This will require coordinated help from America and its Western allies to do three things.

First, they must ramp up technical assistance and training programs to help the machinery of government—parliaments, local authorities, courts, executive agencies and regulatory institutions—work more transparently and deliver what people want: the rule of law, less corruption, fair elections and a government that responds to their economic and social needs. This also means strengthening democratic oversight.

Second, we know from experience that these kinds of assistance don't work unless the political leaders on the receiving end are willing to let them. So we need to generate strong incentives for rulers to opt for a different logic of governance, one that defines success as delivering development and reducing poverty rather than skimming public resources and buying support or rigging elections. This will mean setting clear conditions that will have to be met before economic and political aid is doled out to governments.

The third priority is to expand assistance to independent organizations, mass media and think tanks in these fragile states that will increase public demand for better governance and monitor what governments do. This means aiding democratic professional associations, trade unions, chambers of commerce, student groups and organizations devoted to human rights, women's rights, transparency, civic education, election monitoring and countless other democratic activities. Ordinary people must be educated to know their rights and responsibilities as citizens—and be ready to defend them.

While Western countries have provided this kind of aid for more than two decades, economic assistance handed out at the same time has often undermined democracy efforts by subsidizing corrupt, abusive governments. Aid donors should thus strike a new bargain with recipients, telling them: if you get serious about containing corruption, building a rule of law and improving people's lives, we will get serious about helping you. Those that show a real commitment should get significant new rewards of aid and freer trade. Those unwilling to reform should get little, though the West should continue to fight disease and directly help people in dire need wherever they are.

Finally, the new president should keep in mind the power of example. Washington can't promote democracy abroad if it erodes it at home. The contradictions between the rhetoric of Bush's "freedom agenda" and the realities of Abu Ghraib, Guantánamo, torture, warrantless surveillance and boundless executive privilege have led even many of the United States' natural allies to dismiss U.S. efforts as hypocritical. Thus the new president must immediately shut down Guantánamo and unequivocally renounce the use of torture; few gestures would restore American credibility more quickly. The United States should also reduce the power of lobbyists, enhance executive and legislative transparency and reform campaign-finance rules—both for its own good and for the message it would send.

Make no mistake: thanks to the global economic crisis and antidemocratic trends, things may get worse before they get better. But supporting democracy abroad advances U.S. national interests and engages universal human aspirations. A more consistent, realistic and multilateral approach will help to secure at-risk democracies and plant the seeds of freedom in oppressed countries. Patience, persistence and savvy diplomacy will serve the next president far better than moralistic rhetoric that divides the world into good and evil. We've seen where that got us.

All News button
1
-

Ram Manikkalingam is the Founder of Dialogue Advisory Group and teaches at the University of Amsterdam. He was Senior Advisor on the Peace Process to the previous President of Sri Lanka. He has served as an Advisor with Ambassador rank at the Sri Lanka Mission to the UN in New York. Prior to this he was an Advisor on International Security to the Rockefeller Foundation. He has a doctorate in political philosophy and a bachelors degree in Physics from MIT.  He has been a political activist in Sri Lanka for many years.

Encina Ground Floor Conference Room

Ram Manikkalingam Political Science Speaker University of Amsterdam
Workshops
Paragraphs

Corporate governance reform is a global phenomenon sweeping through the US, Europe, China, Korea, India, Latin America and many other places. These reforms have been accompanied by a surge in corporate governance scholarship focused on emerging markets. This research suggests, although not uniformly, that "better" corporate law and governance tend to be correlated with better stock market development, more dispersed ownership structures, and higher firm profitability, amongst other things. These findings have sparked debate and thought on why these correlations exist and whether there are particular features of corporate law and governance that matter more than others to these economic measures. Indeed, recent research in developed markets has begun to focus on enforcement of corporate and securities laws.

All Publications button
1
Publication Type
Working Papers
Publication Date
Journal Publisher
CDDRL Working Papers
Authors
Paragraphs

This paper summarizes and extends my earlier critique (Bhattacharjea, 2006) of the empirical literature on labour regulation and industrial performance in India. I now focus only on the impact of legal restrictions on temporary layoff, permanent retrenchment and plant closures. After summarizing my earlier paper, I describe in detail the variability of employment protection regimes across Indian states attributable to court judgments, a key factor which other authors have ignored.

I hypothesize that firms may adapt to restrictions on labour flexibility thru fragmentation and outsourcing, a phenomenon that has not been recognized in the literature. I then draw attention to features of the official industrial statistics which undermine many of the conclusions of earlier studies, and propose an alternative methodology to test the new hypotheses while avoiding these pitfalls. The results of this empirical exercise are inconclusive, but reinforce my skepticism about the literature that tries to relate legal restrictions on labour flexibility to industrial outcomes.

All Publications button
1
Publication Type
Working Papers
Publication Date
Journal Publisher
CDDRL Working Papers
Authors
Paragraphs

This paper considers the links between the extent of economic security and subjective work satisfaction. Special attention is paid to the effects of individually and collectively traumatizing events as well as relative gains and losses. These are aspects of “well-being” that have attracted relatively little empirical research in developing countries. Individually traumatizing events depress work satisfaction more strongly than collective catastrophes. The data also suggests that the predominant focus on income in developing countries is too narrow. While both absolute and relative income constitute strong predictors, especially for men, there are many less costly ways to increase work satisfaction. Across the gender divide, the ability to perform work in accordance with one’s skills and to develop those skills (skill security) strongly increases work satisfaction. Occupational health and safety (work security) as well as participative measures (voice security) further significantly increases subjective work satisfaction.

All Publications button
1
Publication Type
Working Papers
Publication Date
Journal Publisher
CDDRL Working Papers
Authors
Miriam Abu Sharkh
Paragraphs

Why did limited government and 'constitutionalism' (the rule of law, constitutional rules, and political representation) evolve in some societies but not others? Guided by history, this paper examines why this evolution reflects dependence on administrators to implement policy choices including those affecting them. Limited government and constitutionalism are manifestations of equilibria in which the administrators have the power to influence choices. The thesis that constitutionalism reflects an equilibrium among the powerful differs from the prevailing one, which asserts that it reflects gains to the weak from constraining the powerful. Analyzing the determinants and implications of administrative power reveals its impact on trajectories of economic development. Distinct administrative-power equilibria have different impacts on the security of the non-elite's property rights; intra-state and inter-state violence (e.g. civil wars and wars, respectively); policies; entry barriers to new technologies and economic sectors; the nature of political conflicts; and the means to resolve conflicts concerning political rights.

All Publications button
1
Publication Type
Books
Publication Date
Journal Publisher
Harvard University Press, in "Institutions and Economic Performance", Elhanan Helpman (ed.)
Authors
Avner Greif
-

Asia’s economies have been hard hit by the current global financial crisis, despite in most cases enjoying strong macroeconomic fundamentals and stable financial systems.  Early hopes were that the region might be “decoupled” from the Western world’s financial woes and even able to lend the West a hand through high growth and the investment of large foreign exchange reserves.  But that optimism has been dashed by slumping exports, plunging commodity prices, and capital outflows.  The region’s most open, advanced and globally-integrated economies—Hong Kong, Singapore, and Taiwan—are already in severe recession, with Japan, Korea and Malaysia not far behind, and dramatic slowdowns are underway in China, India, Indonesia, Thailand and Vietnam.  What role did Asian countries play in the genesis of the global crisis, and why have they been so severely impacted?  How is their recovery likely to be shaped by market developments and institutional changes in the West, and in Asia itself in response to the crisis?  Will the region’s embrace of accelerated globalization and marketization following the 1997-98 Asian financial crisis now be retarded or reversed?

Linda Lim is a leading authority on Asian economies, Asian business, and the impacts of the current global financial crisis on Asia, and she has published widely on these topics. Her current research is on the ASEAN countries’ growing economic linkages with China.

Forthcoming in 2009 are Globalizing State, Disappearing Nation: The Impact of Foreign Participation in the Singapore Economy (with Lee Soo Ann) and Rethinking Singapore’s Economic Growth Model. She serves on the executive committees of the Center for Chinese Studies and the Center for International Business Education at the University of Michigan, where formerly she headed the Center for Southeast Asian Studies. Before coming to Michigan, she taught economic development and political economy at Swarthmore. A native of Singapore, she obtained her degrees in economics from Cambridge (BA), Yale (MA), and Michigan (PhD).

Philippines Conference Room

Linda Yuen-Ching Lim Professor of Strategy, Stephen M. Ross School of Business Speaker University of Michigan
Lectures
Subscribe to Asia-Pacific