Dawood Mamoon

Want economic growth with good quality institutions? Spend on education

The purpose of this paper is to compare the role of human capital accumulation measured by number of years of schooling with the relative contribution of institutional capacity to prosperity. We employ several concepts of institutional quality prevalent in the literature. We discover that developing human capital is as important as superior institutional functioning for economic well‐being. Indeed, the accumulation of human capital stocks via increased education might lead to improved institutional functioning, and the utilisation of policies like trade liberalisation.

Education bias of trade liberalization and wage inequality in developing countries

The aim of this article is to examine the impact of increased trade on wage inequality in developing countries, and whether a higher human capital stock moderates this effect. We look at the skilled–unskilled wage differential. When better educated societies open up their economies, increased trade is likely to induce less inequality on impact because the supply of skills better matches demand. But greater international exposure also brings about technological diffusion, further raising skilled labour demand. This may raise wage inequality, in contrast to the initial egalitarian level effect of human capital. We attempt to measure these two opposing forces. We also employ a broad set of indicators to measure trade liberalization policies as well as general openness, which is an outcome, and not a policy variable. We further examine what type of education most reduces inequality. Our findings suggest that countries with a higher level of initial human capital do well on the inequality front, but human capital which accrues through the trade liberalization channel has inegalitarian effects. Our results also have implications for the speed at which trade policies are liberalized, the implication being that better educated nations should liberalize faster.

Not loving thy neighbour as thyself: Trade, democracy and military expenditure explanations underlying India—Pakistan rivalry

This article analyses whether greater international trade, democracy and reduced military spending lower hostility between India and Pakistan. Conflict between the two nations can be best understood in a multivariate framework where variables such as economic performance, multilateral trade with the rest of the world, bilateral trade, military expenditure, democracy scores and population are simultaneously taken into account. The empirical investigation is based on time series econometrics from 1950— 2005, allowing causality to be examined. The results suggest that reduced bilateral trade, greater military expenditure, less development expenditure, lower levels of democracy, lower growth rates and less general trade openness are all conflict enhancing, albeit with lags in some cases. Moreover, there is reverse causality between bilateral trade, militarization and conflict; low levels of bilateral trade and high militarization are conflict enhancing, but conflict also reduces bilateral trade and raises militarization. Economic growth is conflict mitigating, but the reverse is not true. Globalization, or greater openness to trade with the rest of the world, is the most significant driver of a liberal peace, corroborating a modified form of the capitalist peace, rather than a common democratic political orientation suggested by the pure form of the Kantian liberal peace.

Which Institutions Are More Relevant Than Others in Inequality Mitigation

The paper estimates the respective contributions of legal, economic, political and social institutions on inequalities within countries across the globe, while using various measures of openness and trade policy as our control group. The results suggest that institutions have significant effects on inequality. Among legal institutions, rule of law and control for corruption have a stronger impact on inequality than voice and accountability. Though we find that countries which practice democracy are less prone to unequal outcomes, we also find that autocratic setups may not necessarily lead to greater inequalities. Both frameworks may carry redistributive effects, as both are found to be positively associated with the incomes of the poorest and negatively associated with the incomes of the richest. Secondly, whether a country is politically stable is rather a more decisive institutional factor apropos inequality than whether a country has an autocratic or a democratic orientation. Economic institutions also seem to play an important role in alleviating inequalities within countries. Whether the government is functioning effectively and whether it has a robust fiscal and monetary policy seems to have stronger impact on inequality than regulatory quality. Education for all, a proxy for social institutions, has a strong redistributive power. Overall, legal institutions trump any other institutional categories in reducing inequalities in a country. On the other hand, middle income group is most likely to benefit from good functioning institutions than any other income group.