Parties, Time Horizons, and the Pursuit of Economic Growth through Technological Development
Abstract: Economic models
assert the importance for technological progress for long-term economic
development. They also assert the importance of government policies
that can offset a set of market failures, costs, and risks that would
otherwise hinder technological progress. My dissertation explores the
conditions in which politicians are likely to deploy such policies. The
motivating observation is that, while the received wisdom in comparative political
economy suggests that politicians are shortsighted, the evidence suggests that the returns to
technology policy often are delayed on the order of a decade or more--the implication being that policymakers would rarely, if ever,
deploy such policies in the pursuit of economic growth. Observation
reveals, however, that it is the case that some governments do set
policies that intend to encourage innovation, technology adoption, and
technological development generally speaking. Under what conditions are
governments likely to place a priority on technology policies?
To
answer this question I develop an argument in which political time
horizons are affected by the degree to which ruling
parties are well-institutionalized and the amount of political
competition a ruling party faces. Drawing from literatures in economics
and industrial organization on overlapping-generations organizations, of which the works of Cremer (1986) and
Alesina and Spear (1988) are representative examples, I argue that
within well-institutionalized ruling parties, an overlapping
generations bargain can obtain wherein a younger generation of party members (called party deputies) can achieve the support for technology policies from the
party's present generation of party leaders. In payment for this support, deputies commit credibly to supporting the other favored
policies of party leaders thereby increasing the agenda-setting and
seniority powers of those leaders. Additionally, deputies forgo any opportunity to control the distribution of the pork elements of
whatever technology polices are deployed, opting instead to allow leaders to control the distribution of pork. In this way, a burden-sharing
agreement is reached within the ruling party that allows technology
policies to be deployed even though the returns to such policies are
relatively delayed. This kind of bargain is unlikely
to emerge from within a fragile, weakly-institutionalized, non-overlapping generations ruling party.
That said,
ruling parties, even well-institutionalized ones, must also expect to
hold a sufficient share of future governments to make
technology-oriented economic politically palatable. That is, they must
have a sufficiently strong incumbency advantage to have any incentives
to give priority to technological development. Without such an
advantage, the ruling party cannot expect to recoup the returns to
their investments in technological development. A weak incumbency
advantage makes technology policy politically unpalatable. I test
these claims on a cross-national, time series sample of countries of
all levels of economic development.
Chapter Outline:
Chapter 1: Introduction
Chapter 2: A Political Economy Model of Parties and Technological Development
Chapter 3: Research Design and Empirical Investigation I: OLG Parties and Human Capital Formation
Chapter 4: Empirical Investigation II: OLG Parties and Total Factor Productivity
Chapter 5: Conclusion