Research

Research at the Center for Global Development, Technological Change and Entrepreneurship is organized under four broad themes: the American and European Union experiments, international factor mobility and development, globalization and technological change and entrepreneurial development in the informal economy.

THE AMERICAN AND EUROPEAN UNION EXPERIMENTS

The constitutional principles of the American Republic: prosperity, democracy and happiness.

Today the principles of constitutional government are as important as at the time of the Founding of the American Republic. Yet there is concern regarding what is meant by constitutionalism and the implementation of democratic governance. Many countries proclaim to be democratic, yet fail to uphold constitutional standards leading to the radical growth of government, the creation of a clientelist state and the arbitrary exercise of political power. The 2008-2010 economic crisis for instance has led to an expansion of government in developed countries.

In the eighteenth century, the design of a constitutional government in America was an extraordinary accomplishment that would shape American destiny: its culture, lives and the place of the United States in the world. What important lessons does the original spirit of the American Founding and the constitutional principles embodied in the constitution have for the twentieth first century? how do the principles of limited government, federalism and rule of law find relevance at a time when the scope of government in the US is expanding at a reckless pace? What relevance do the constitutional principles embodied in the Constitution have for offering guidance to other societies that seek free democratic and prosperous futures? Lastly, what lessons in constitutional and policy design, including the creation of political mechanisms designed to check the arbitrary exercise of power and the effective functioning of markets can be gleaned from the American experiment? These are some of the critical public policy questions the center will seek to answer.

The recent history, theory and outcomes of the European integration.

The origins and evolution of the European experiment –the European Union- is another extraordinary achievement in regard to peaceful relations among European nation-states, economic integration, institutional design and international relations. Fifty years after its creation, there is a mixed record when compared with the expected results of the "European Founding Fathers". Research on the history, competing theories about the origins of the European integration and its current outcomes represent central subjects to explore. As Andrew Moravcsik's seminal work "The Choice for Europe" questions: "Do these unifying steps demonstrate the preeminence of national security concerns, the power of federalist ideals, the skill of political entrepreneurs or the triumph of technocratic planing? Moravcsik rejects such views. Economic interdependence has been the primary force compelling these democracies to move in this surprising direction." The Center aims to contribute to this scholarly debate by carrying out research about the European Union's experiment.

ECONOMIC GLOBALIZATION AND DEVELOPMENT

Economic globalization is an increasing fact of life in the 21st century. Still, key features of globalization, namely the liberalization of capital and labor markets exist in an uneven fashion across the globe both among developed economies as well as developing/emerging market economies such as the so-called BRIC countries (Brazil, Russia, India and China) and other major economies such as Mexico, Turkey, Indonesia and others. Moreover, critical indicators of economic success, such as economic growth as well as many indicators of social pathology, suggest great unevenness in economic development. The Center will explore the processes of economic liberalization within an analytic framework that focuses on the four pillars of a successful economy, the production of goods, services, capital and labor, and how the existence or lack thereof translate into successful outcomes.

Research at the Center focuses on policies that influence the movement of factors of production across national borders. The main motivation is the assertion that institutions, regulations and policies matter. This follows Mancur Olson's point that "National borders delineate areas of different economic policies and institutions, and so - to the extent that variations in performance across countries cannot be explained by the differences in their endowments- they tell us something about the extent to which societies have attained their potentials." Olson and others have shown that the political and economic institutions of society are critical in transforming resources endowments into economic growth and other criteria of prosperity. These institutions include "legal systems that enforce contracts and protect property rights and on political structures, constitutional provisions, and the extent of special-interest lobbies and cartels." (Olson). It is in this vein, that the Center aims to carry out research on policies that help developing countries to build up accountable institutions that enforce property rights and that guarantee to all individuals equal opportunity to compete avoiding special privileges for the few.

GLOBALIZATION AND TECHNOLOGICAL CHANGE

Capitalism and markets have been transformed by sweeping, episodic revolutions in technology and related advances. Technology, in the words of Schumpeter, create "gales of creative destruction", sweeping away all ways of doing things and producing radical new organizational and social structures. The development of mass production techniques and advances in steel making were critical in inaugurating the industrial revolution. The development of radio and television and satellite communications in the second half of the 21st century produced similar transforming effects. Most recently, the development of computers and the amazing growth in computational capabilities available virtually to all citizens combined with the rapid growth of the internet and other related network technologies have transformed the way in which we interact with each other and the way business transacted.

Today we are in the midst of breathtaking advances that will come to fruition over the next few decades, transforming our economies and politics. What will the maturing of the internet, social networking culture, cloud based ubiquitous computing and revolutionary advances in other technologies such as nano tech and genetic engineering mean for capitalism, markets and political institutions? These and related topics will be explored within the context of the shift in global economic and financial power to the emerging economies in Asia and South America.

ENTREPRENEURIAL DEVELOPMENT IN THE INFORMAL ECONOMY

In the informal economy, it has long been recognized that entrepreneurship plays a key role. It stimulates economic growth and creates employment. These benefits have been one of the key drivers behind the surge of microcredit around the world. If large donors can stimulate the economies from the bottom up, they hope to accomplish the economic growth that macro policies and projects have failed to do. (Mortensen et al.).

According to the World Bank "Informal workers in developing countries make up more than half the workforce. They receive low wages and no formal contracts or benefits; yet often represent the most dynamic part of the economy. The likely surge of informal jobs due to the economic crisis makes the management of informal employment even more challenging and topical. Responding to this emerging challenge is critical, not only for the well-being of millions of workers but also for sustainable development." It is in the dynamic informal economy where entrepreneurs sprout as spontaneous orders -in Hayekian terms- as a result of inefficient regulations that governments are unable to enforce, tax burdens, taxpayers' attitudes toward the state, restrictions on the labor market and bad quality of government institutions. An increase in size of the informal sector hurts growth by increasing the number of activities that use some existing public services les efficiently and by impeding the registry and enforcement of property rights, a necessary condition for economic growth. Research at the Center in this topic is central and will apply the methodology of experimental economics.