Lawrence Saez

Political Cycles, Political Institutions and Public Expenditure in India, 1980–2000

In Western democracies it is held that parties and their positions affect how politicians choose to make public expenditure and investment. This article examines the public policy choices of politicians in India, a large well-established democracy with remarkable subnational variation. Public expenditure, from education and health to agriculture and irrigation, is analysed. Counterintuitive findings – that election timing and political factors play a strong role in the subnational states, and that party competition increases investment in education – are explained by highlighting the role economic and political uncertainty plays in politicians’ choices. Building a ‘Polanyi’ argument enhanced by a supply-side mechanism highlights the importance of compensation and insurance and the imperatives of political stability for subnational politicians, who attempt to maximize re-election chances in an uncertain environment.

Liquidity Pools, Risk Sharing, and Financial Contagion

This paper reevaluates the Allen–Gale (2000) analysis of interbank deposits to explain financial contagion. This paper modifies the pecking order of asset liquidation developed in Allen–Gale, which is essential in fragility analysis. Furthermore, we also provide a claim structure called “liquidity pool” that can both achieve risk sharing and prevent financial contagion across regions when asymmetric information about bank assets is absent. This model can partly explain why bank panics reduced substantially after the founding of the Fed and the role of IMF in regional financial crises.

When State Responses Fail: Religion and Secessionism in India 1952--2002

Why are some challenges to the territorial unity of democratic states more tractable than others? The literature has focused on numerous explanatory factors, including the impact of institutional reforms and government policies implemented in response to subnational mobilization and the ethnic identity of subnational groups. Building on the insights of a large literature on the political consequences of religious mobilization, this article analyzes a new dataset on the trajectory of 181 subnational political organizations active in India between 1952 and 2002. The article shows that demands for autonomy or secession put forward by religious organizations are likely to prove much more resilient over time than identical demands advanced by nonreligious organizations. The analysis has important implications for the study of secessionism and ethnic politics in general.

India's economic liberalization, interjurisdictional competition and development

Abstract This article discusses the impact that economic liberalization has had on federal relations in India. The article argues that economic liberalization has transformed federal relations in India from intergovernmental cooperation between the central government and the states towards insterjurisdictional competition among the states. The author posits that this change has resulted in an inconclusive legacy regarding economic polarization among the states. The article concludes that interjurisdictional competition has complicated the Indian states ability to address fundamental developmental challenges.

The political economy of global firms from India and China

This article attempts to build a bridge between contemporary studies of global firms from emerging economies and existing theories in comparative political economy. It argues that given the primacy of the state as an economic actor in developing countries, the variety of capitalism literature could provide a theoretical foundation for firm-level analyses of emerging market multinationals. For example, the authors suggest that China and India may be moving towards a ‘hybrid market economy’. They also offer a typology of Indian and Chinese corporates to demonstrate an empirical approach to analysing domestic business–government relationships and the ways in which these firms are shaped by the peculiarities of their respective institutional setting. Finally, they identify some of the likely pitfalls of doing cross-national comparisons of emerging market multinationals, particularly with respect to the reliability of corporate data.

The future of South Asia

This article explains the challenges posed to developing social science and humanities research by the future of South Asia. The author argues that forecasting future trends about developments in South Asia is an activity limited by cognitive biases. The author then outlines some approaches that could generate new insights about how to study South Asia.

The Sarkaria Commission and India's struggle for federalism

Abstract This article provides an overview and analysis of the 1988 Sarkaria Commission Report, the most prominent in a series of studies on Indian centre‐state relations. The article stresses the context under which the Sarkaria Commission was constituted and the reactions to it once released. The article focuses on key arguments presented by various state governments to restructure several aspects of federal relations in India. It concludes with an assessment of the significance of the Sarkaria Commission, and details structural reasons why most of its recommendations have not been implemented.

Methods in Governance Research: A Review of Research Approaches

The extant literature relating to the relationship between governance and inclusive growth does not appear to have reached convergence towards a preferred methodological approach. This paper attempts to review the strengths and shortcomings of different methodological approaches to the study of the relationship between governance and inclusive growth. The paper offers some recommendations on possible new directions in the study of the relationship between good governance and inclusive growth.

Bangladesh in 2017: Bloggers, Floods, and Refugees

Bangladesh experienced a turbulent year in 2017, largely as a result of damaging floods. Moreover, the flood of Rohingya refugees in the second half of the year added considerable strain to Bangladesh’s political economy. There are worrisome signs that the Bangladeshi state is using a range of institutional and extrajudicial mechanisms to stifle political opposition.

Bangladesh in 2016

The year 2016 was challenging for Bangladesh. Although there are promising signs of a transition toward upper lower-income status, there is sufficient political instability at the margins to warrant concern. The capstone political event was the July terrorist attack in Dhaka, which many feared might represent the first clear metastasized imprint of the Islamic State (ISIS) in Bangladesh.