Politics through the Lens of Economics
Term paper guideline
December 11, 2018
Masayuki Kudamatsu
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Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
Grading Policy
Term Paper (79%)
Participation in
Online Discussion
(21%)
| S | A | B | C | F |
|---|---|---|---|---|
| 90 or above | 80-89 | 70-79 | 60-69 | Less than 60 |
Grades matter for your future
Historically,
college grades do not count at all
for job hunting in Japan
Not any more!
日本経済新聞 May 16, 2018
Also, your GPA does matter for studying abroad
Email a PDF copy to kudamatsu@osipp.osaka-u.ac.jp by
9 am on
Wednesday 13 February
Last class
Exam period
22 January
29 January - 8 February
For your information:
Submission Deadline
because I have to submit your grades by 20 Feb...
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
Pick a country
And discuss whether
Theory of Why Nations Fail can
explain economic performances
of the country of your choice
Term Paper
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
Theory of Why Nations Fail
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
So you need to know that in the country of your choice...
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
Are political institutions
inclusive
or
extractive?
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
So you need to know that in the country of your choice...
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
Are economic institutions
inclusive
or
extractive?
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
So you need to know that in the country of your choice...
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
Is the economy
growing
or
stagnated?
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
If it turns out, for example, ...
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
The theory fails
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
If it turns out, for example, ...
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
The theory fails
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
Evidence is consistent with the theory if
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
It would be nicer if you find
evidence for causality as well
Inclusive Economic Institutions
Economic Growth
Inclusive Political Institutions
Evidence is consistent with the theory if
Extractive Economic Institutions
Economic Stagnation
Extractive Political Institutions
It would be nicer if you find
evidence for causality as well
So you need to find information on these three:
Economic Institutions
Economic Performance
Political Institutions
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
Measure of economic performance
GDP per capita
Average annual income of a person living in the country
For detail, pick any introductory textbook on macroeconomics such as Jones (2017), Mankiw (2018), Acemoglu et al. (2018)
Data source for GDP per capita
Published by the World Bank
1. Click the link above
2. Click
3. Type "GDP per capita"
Which should you choose?
Then you'll see this:
You need to understand "current", "constant", and "PPP"
GDP in current $ (aka. nominal GDP)
"Current" doesn't take into account inflation
Economic growth typically comes with inflation
Ignoring inflation will overrepresent economic growth
100 yen in 1960 = 568.29 yen in 2018 (source: InflationTool.com)
e.g.
Some poor countries suffer from hyperinflation
e.g.
1,000,000% in Venezuela in 2018 (source: Reuters)
GDP in constant $ (aka. real GDP)
"Constant" does take into account inflation
GDP
(constant 2010 $)
GDP
(current $)
Inflation rate
since 2010
=
PPP (Short for "Purchasing Power Parity")
Used for international comparison
Foreign exchange rate
Many services (e.g. haircut) are not exported or imported
Investors speculate in the currency market
Japanese yen appreciates
whenever the world economy becomes uncertain
e.g.
price level difference across countries
PPP (cont.)
PPP is the "real" exchange rate
e.g.
Very simple version of PPP: the Big Mac index
Image source: The Economist
WDI's PPP is based on
cross-country price surveys by International Comparison Program
Then which indicator should you use?
Then which indicator should you use?
GDP in constant values for tracking over time
(US$ is easier for foreigners to interpret)
Then which indicator should you use?
GDP in PPP for comparing to other countries
(Use constant value if tracking multiple countries over time)
Create a graph
Once you choose the indicator, click it.
Then click "DataBank" on the lower right.
Select "Country" and "Time". Click "Chart" on top right
WDI dates back to 1960 at most
Historical GDP data
provides the best estimates of historical GDP data
Subnational GDP data
See this Prulu entry
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
| economic institutions | ||
|---|---|---|
| Secure for everyone |
Property rights | Insecure for majority of people |
| Free | Occupational choice |
Forced labor |
| Free | Entry of new businesses | Prevented by monopolies |
| Unbiased | System of laws | Biased for the powerful/rich |
| Promoted | Public service provision | Discouraged |
Economic Institutions
Inclusive
Extractive
Property rights
Secure for everyone
Insecure for
majority of people
Occupational choice
Free
Forced labor
Entry of
new businesses
Free
Prevented by
monopolies
System of laws
Unbiased
Biased for
the powerful / rich
Public service provision
Provided
Limited
How to measure economic institutions?
Economic Institutions
Inclusive
Extractive
Property rights
Secure for everyone
Insecure for
majority of people
Occupational choice
Free
Forced labor
Entry of
new businesses
Free
Prevented by
monopolies
System of laws
Unbiased
Biased for
the powerful / rich
Public service provision
Provided
Limited
How to measure economic institutions?
For this aspect of institutions, there is a famous dataset
Conducted by World Bank (annually since 2004)
Law firms are surveyed to collect cross-country data on
Operates in the largest business city
100% domestically owned
10-50 employees
etc.
Business environments for a hypothetical, identical firm
Among 11 indicators, the following is relevant to us
Starting a business
# of procedures
# of days
Amount of fees
Amount of minimum capital
Doing Business surveys (cont.)
to register business
Examples of procedures to set up a firm
Source: Table 1 of Djankov et al. (2002)
Doing Business surveys (cont.)
Policy-makers in developing countries want to be ranked high
to attract foreign investment
In 2014
India's Prime Minister
Narendra Modi publicly
said he would aim 50th
e.g.
Image source: Scroll.in
Doing Business surveys (cont.)
Limitations
Doesn't measure the actual enforcement
Hypothetical firm may be irrelevant for a country
See Besley (2015) for more detail
Doing Business surveys (cont.)
How to obtain data
Click the blue "Select an economy" button
Search for your country
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
Inclusive
Extractive
Both
Plurality
and
Centralized
State
Either
Absolutist
or
Lack of
Centralization
How to measure political institutions?
We need to measure the degrees of:
(1) plurality
(2) centralization
Measurement of plurality
Executive constraints from Polity IV dataset
"Extent of institutional constraints on the decision-making powers of the chief executive" (Polity IV Project: Data User's Manual, p. 62)
Known to positively affect GDP per capita (Acemoglu & Johnson (2005))
Takes the integer values from 1 to 7
See pp. 63-66 of Polity IV Project: Data User's Manual
for what each value represents
See the column entitled "exconst"
If your country has values of -66, -77, -88:
See p. 17 of Polity IV Project: Data User's Manual
Measurement of centralization
Tax revenue as % of GDP (cf. Lecture 3)
Positively associated with GDP per capita
Source: Figure 6a of Besley and Persson (2013)
Plurality and Centralization go hand in hand
Source: Daron Acemoglu (2013) "State Building: A Political Economy Perspective" Slides for Nemmers Prize Lecture, p. 15
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
Beyond data
Collect documents on institutions & episodes
Find books & articles from:
References in Wikipedia (e.g. Japan)
When you read these documents
Have the theory of Why Nations Fail in your mind
Interpret facts and the series of events
with the theoretical framework of Why Nations Fail
Economic Institutions
Economic Performance
Political Institutions
Causes of income inequality
across countries
Economics as a tool to
understand politics & economy
Value of a theory
to see the world
With this book, we will learn 3 things:
1
2
3
The aim for writing this term paper:
Learn the value of a theory to see the world
Road Map
Grading policy
Submission deadline
What you should write
Data on economic performance
Data on economic institutions
Data on political institutions
Beyond Data
How to structure your paper
To avoid the writer's block
First, write down everything in your head
At this stage, don't worry about grammar, logical consistency, when to create a new paragraph, etc.
It's like brain-storming. Get your ideas out.
Then, draw a bubble diagram to organize what you've written down
Finally, write down the outline of your paper
See next slide for an example
This is what I've written to organize paragraphs on Zimbabwe in Chapter 13 of Why Nations Fail
First paragraph
Clearly state your conclusion
The theory of Why Nations Fail does explain Japan's economic growth after WWII. However, it does not fully account for economic stagnation in Japan since the 1990s.
e.g.
This way, while the reader (me) goes through your paper, he can understand why you mention this and that.
It's pain for the reader to read many sentences without knowing what you want to say
From second paragraph onwards
The first sentence(s) should be a summary of the paragraph
The same reason: it's pain for the reader to read a paragraph without knowing what you want to say
"Singapore, the consistently high-achiever in PISA, now does even better: it is the top-performing country in each subject area. The average pupil's maths score of 564 suggests Singaporean teens are roughly three years ahead of their American peers, with a score of 470."
"Other East Asian countries also score highly across most domains, as they have done since PISA was launched 15 year ago. Japan and South Korea, as well as cities such as Hong Kong and Macao, both autonomous territories of China, and Taipei, the capital of Taiwan, all have above-average results in science and maths."
Examples from The Economist magazine's article on PISA tests
See how the first sentence summarizes the whole paragraph
"PISA has flaws. It is one of many standardised tests, and tests are not all there is to learning. But it matters. It is the most influential research report in education for good reason. It offers informed guidance on what policymakers should do to fix their school systems. Just as importantly, it tells them what not to do."
Examples from The Economist magazine's article on PISA tests (cont.)
Sometimes, the summary spreads across the first couple of sentences.
Last paragraph
Restate your conclusion
The reader may forget what he/she read at the beginning
Mention limitations in your argument
Be honest.
No argument is perfect. People appreciate your ability to be aware of caveats.
Don't forget citations
(i.e. sources of information)
Finally...
Don't be a politician in other words...
Two types of citation & Why important
The reader can check if your evidence is credible.
Data sources
Someone else's argument
The reader can tell whether it is your original argument or not
How to cite a source of information
Author(s)
Title
Publication (magazine, newspaper, book publisher, website, etc.)
Year of publication
Crucial for the reader to know if information may be out-dated
For more detail, look at MIT Library's guideline
How to cite a source of information (cont.)
Method 1: Add a footnote
Around 35-50% of Japanese citizens do not support any particular political parties since the late 1990s.
1
1
田中愛治「無党派層のこれまでと現在」nippon.com, 18 July, 2012. www.nippon.com/ja/in-depth/a01104/
How to cite a source of information (cont.)
Method 2: Harvard Referencing
Around 35-50% of Japanese citizens do not support any particular political parties since the late 1990s (田中 2012).
田中愛治 (2012)「無党派層のこれまでと現在」nippon.com, 18 July, 2012. www.nippon.com/ja/in-depth/a01104/
References
Then add a list of references at the end of the paper