Syed Mansoob Murshed

North-South Models of Growth and Trade

The paper surveys the literature that combines growth and trade into models of North-South interaction. We distinguish two strands of growth theory: old (exogenous) and new (endogenous) growth. We also distinguish old trade theory which assumes constant returns to scale and perfect competition, and new trade theory which relaxes both of these assumptions. This gives us four possible combinations of growth and trade theories which provide the basis of the taxonomy employed in our survey. We address the following long-standing issues raised in the literature: first, given that one of the North-South asymmetries is that the North leads in technical progress, how does the South adjust to such changes? Second, can the models explain patterns of trade and income differentials between the regions? Third, do asymmetries mean that standard prescriptions on the mutual benefits of free trade and free movements of capital need to be modified? Finally, can our models explain why the South continues to favour protection of its manufacturing sectors at the same time that barriers within the North are being dismantled? Copyright 2002 by Blackwell Publishers Ltd

Transnational Terrorism as a Spillover of Domestic Disputes in Other Countries

This paper models transnational terrorism as a three‐way strategic interaction involving a government that faces armed opposition at home, which may spill over in the form of acts of terrorism by the states opponents against the governments external sponsor. The external sponsor also utilises deterrence against potential terrorists, which only lowers terrorism if terrorists are not intrinsically motivated by a deep‐seated sense of humiliation. The model highlights the importance of intrinsic motivation. A rise in the external powers preference for deterrence against terrorism may backfire in these circumstances. Increases in the governments military efficiency against the rebels, who are also terrorists against the governments sponsor, raises overall levels of violence.

Natural Resource Dependence and Economic Performance in the 1970–2000 Period

We look at the type of natural resource dependence and growth in developing countries. Certain natural resources called point-source, such as oil and minerals, exhibit concentrated and capturable revenue patterns, while revenue flows from resources such as agriculture are more diffused. Developing countries that export the former type of products are regarded prone to growth failure due to institutional failure. We present an explicit model of growth collapse with micro-foundations in rent-seeking contests with increasing returns. Our econometric analysis is among the few in this literature with a panel data dimension. Point-source-type natural resource dependence does retard institutional development in both governance and democracy, which hampers growth. The resource curse, however, is more general and not simply confined to mineral exporters.

Identity and Islamic Radicalization in Western Europe

This article argues that both socio-economic disadvantage and political factors, such as foreign policy of the West about the Muslim world, along with historical grievances, play a part in the development of Islamic radicalized collective action in Western Europe. We emphasize the role of group identity-based individual behaviour in organizing collective action within radicalized Muslim groups. Inasmuch as culture plays any role at all in radicalization, it is because individuals feel the imperative to act on the basis of their Muslim identity, something to which different individuals will attach varying degrees of salience, depending on how they place their Muslim identity-based actions in the scheme of their multiple identities. We also emphasize the role of the opportunistic politician, from the majority European community, in fomenting hatred for Muslims, which also produces a backlash from radicalized political Islam. We present comparative evidence of socio-economic, political and cultural disadvantage faced by Muslim minorities in five West European countries: Germany, the UK, France, Spain and the Netherlands.

Globalization, Marginalization and Development

This paper surveys issues related to globalization, and the obstacles to the successful integration of vulnerable economies.

Is Fiscal Decentralization Conflict Abating? Routine Violence and District Level Government in Java, Indonesia

Utilising a newly created data set we examine the relationship between routine/everyday violence and fiscal decentralization in 98 districts of the Indonesian island of Java. By examining possible relationships between fiscal decentralization and routine violence, this paper fills a gap in the literature where the analysis of the relation between fiscal decentralization and violence is relatively scant. Routine violence, which is different from both civil war and ethno-communal conflict, centres around group brawls, popular justice or vigilante violence. Despite the uniform implementation of fiscal decentralization, sub-national entities exhibit varying experiences with decentralization, but a common consequence is the increased size of local government. Fiscal decentralization, and the increased size of local government, can alleviate pent-up frustrations with a centralized state, as local government expenditure is seen to satisfy the needs of communities that people identify with more closely. Our results show that this is indeed the case, but the capacity to do so mainly lies with richer districts.

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.

The impact of civil war on foreign direct investment flows to developing countries

ABSTRACT We investigate the impact of civil war on foreign direct investment (FDI) flows to developing countries. We employ a new data-set that disaggregates FDI inflows to primary, secondary and tertiary sectors. Second, we control for a richer set of economic and institutional variables that could determine FDI inflows including population, gross domestic product (GDP) per capita, the degree of trade openness, exchange rate variability, inflation, the governance structure of the host country using International Country Risk Guide data and its regime type using the POLITY autocracy–democracy data. We also address the reverse causality between FDI and conflict and the potential endogeneity of explanatory variables by employing dynamic system generalised method of moments (GMM) techniques in estimation. Our results indicate that primary sector FDI flows to developing countries are not significantly affected by civil war, whereas secondary and tertiary sectors FDI are more sensitive to such outbreak, potentially leading to reversals of existing FDI. Among institutional variables, government stability and control of corruption are more significant compared to regime type, law and order, and bureaucratic quality.

‘Give War A Chance’: All-Out War as a Means of Ending Conflict in the Cases of Sri Lanka and Colombia

This article investigates the military approach as a means of solving protracted civil conflicts, in particular focusing on the cases of Sri Lanka and Colombia in comparison. The approach adopted is to study the emergence of these military options within the context of each countrys history and to assess whether the call for war was merely a consequence of the international ‘war on terror’, or driven by internal elements. The article explores the epistemological groundings and pitfalls of the all-out war theory informing this approach, before reassessing the significance and validity of the theory in relation to Sri Lanka and Colombia.