THE DEBT/TAX CHOICE IN THE FINANCING OF STATE AND LOCAL CAPITAL EXPENDITURES*

ABSTRACT. State and local governments commonly finance investment in public capital by issuing bonds and by using current revenues. This paper presents a model of state and local governments' reliance on borrowing in which the optimal share of debt in the financing of capital investment depends on the relative costs of tax and debt finance. Equations are derived and estimated for spending on public capital and the share of debt in the financing of that spending. The results reveal that the level of private incomes plays an important role in both the capital investment and financial decisions of the jurisdiction. Even after controlling for Sunbelt-Snowbelt differences in incomes, grants, outstanding debt and certain demographic factors, the results indicate that state and local governments located in the Snowbelt rely more heavily on bond issues to finance capital investment. Finally, the estimated invariance of the level of state and local capital investment to the share of debt in the financing of the investment suggests that investment decisions are not greatly affected by factors influencing the willingness to issue bonds.     

Technological Innovation in China's High-Tech Sector: Insights from a 2008 Survey of the Integrated Circuit Design Industry in Shanghai

An intensive investigation of China's high-tech sector led by a noted Hong Kong—based geographer examines the patterns of cooperation between firms and local governments (so-called "state-firm strategic resonance") as an alternative to knowledge spillover in an effort to explain why certain firms are more likely to innovate than others within an economic cluster. As a case study, they select the integrated circuit design industry (a key in the development of more efficient computing and thus a critical element of the digital revolution) in Shanghai, one of the most advanced metropolitan regions in China. A systematic analysis of firm-level data obtained inter alia from the authors' 2008 survey and interviews revealed a significant pattern of variation in innovation that could not be explained by inter-firm interactions in the process of industrial clustering. The authors argue that the uneven pattern of technological innovation is contingent on a state-built institutional and market environment designed to stimulate firms' innovative activities, and demonstrate how firms respond to that environment in a Chinese metropolis. Journal of Economic Literature, Classification Numbers: H700, L630, O310, P230, R280. 5 figures, 7 tables, 57 references.     

Africa's Next Debt Crisis: A Relational Comparison of Chinese and Western Lending to Zambia

Africa faces a new debt crisis fuelled by Chinese and Western lending. At the forefront is Zambia, which defaulted on Eurobond payments in 2020. The article sets the developing Africa-wide crisis within a relational comparison that draws the current Zambian moment together with the financial collapse of the 1980s. By placing Chinese lending within a comparative global frame, we make three contributions. First, Zambia provides a “spatial fix” for capital, but such African borrowing is not passive and shapes hegemonic struggles between China and the US. Thus secondly, Africa's relationship with debt is co-constituent in the remaking of the global economy, as signalled by the contested execution and interpretation of development-as-modernisation. Finally, a relational comparison of the two debt crises demonstrates that global capitalist hegemony is, partly, engineered by the consent and coercion of African governments, yet the human costs of borrowing are fully borne by the world's poorest.     

Congo's Odious Debt: External Borrowing and Capital Flight in Zaire

During the dictatorship of Mobutu Sese Seko, Congo (or Zaire, as Mobutu renamed the country) accumulated a public external debt of roughly $14 billion. At the same time, Mobutu and his associates extracted wealth from the country. By 1990, real capital flight from Zaire amounted to $12 billion. With imputed interest earnings, the accumulated stock of Zairian flight capital was nearly $18 billion. Congo's successor governments may be able to repudiate liability for the Mobutu regime's debts on the basis of the doctrine of odious debt. Creditors could then seek to recover their losses by identifying and impounding flight capital which was extracted from the country.     

Planning for Climate Change Adaptation in a Multi-level Context: The Gothenburg Metropolitan Area

Individual local governments are key players in Sweden's strategy for climate adaptation but their authority does not match the scale of climate change and its impacts. Competences are divided among local, regional and national authorities. Climate adaptation thus requires cooperation, particularly in metropolitan regions. This raises issues of coordination, legitimacy and effectiveness of adaptation measures recommended in local Master Plans. The focus here is on how the 13 municipalities in the Gothenburg Metropolitan Area—expected to be the part of Sweden most affected by impacts of climate change—address and act upon issues of climate change adaptation within the framework of Sweden's Planning and Building Act, which places responsibility for the “common interest” of climate adaptation with local governments. Analysing municipal Master Plans, as well as the comments on these plans from the regional County Administrative Board and from Göteborg Region Association of Local Authorities, the inter-municipal association charged with infrastructural planning, I identify patterns in terms of coordination, legitimacy and effectiveness of planning for climate change adaptation. Results are discussed in relation to propositions from recent research on planning for climate adaptation in multi-level contexts.     

Developing geographic information infrastructures for local government: the role of trust

The United States's National Spatial Data Infrastructure (NSDI) model presumes that the local government agencies of counties and municipalities will share their geographic information freely with government agencies of regions, states and federal agencies. This article takes up the issue of local government involvement in the NSDI by asking the question: why should local governments involve themselves in the NSDI? This question is informed by considering the social and technological imbrication of the NSDI. One of the oldest spatial data infrastructure projects, the NSDI offers insights into the complexity of implementing infrastructure in federal models of shared governance. This article focuses on the political and financial dimensions of developing infrastructure among local governments. Trust is quintessential at this level of government. Local government agency activities experience an inherently closer coupling with political representatives and with different agencies in both intramunicipal and intermunicipal activities. Building the NSDI is fundamentally an interagency act and thus a matter of trust. Trust is a key issue in the development of the NSDI, as the results of a study of Kentucky local government agencies indicate.     

A Time to Speak

Abstract

This article explores the significance of resonance as a mode of social causality in response to William Connolly's book, Capitalism and Christianity, American Style. While applauding Connolly's identification of "affinities of spirituality" as effective in forming American politics, it suggests that the character structure of ressentiment that is encountered in right-wing Christianity and politics may be the result of instability. Examining the economic basis for growth and instability in the creation of dollars in the form of debt lacking an underlying guarantee, it suggests that this instability is felt throughout American society in everyday experiences of credit and debt.     

The costs of putting Valencia on the map: the hidden side of regional entrepreneurialism, ‘creative city’ and strategic projects

ABSTRACT

Strategic projects based on culture and sports have been one of the vectors of regional development since the 1990s. Accordingly, local and regional governments have drawn up entrepreneurial strategies to project their image internationally and foster investment and tourism. These developments have been described in Spain as ‘The Calatrava Model’ for putting a city/region on the map and for boosting tourism. However, from the study of the case of Valencia and four strategic projects (The Fifth World Meeting of Families, The America's Cup, Formula 1 and The City of Arts and Sciences), we will show how there is a hidden side to this paradigm, which boils down to an unsustainable, top-down system whose sole purpose is to gain and maintain political hegemony. We will also assess the medium and long term impacts of these projects in terms of: opportunity costs, snowballing debt, corruption, and an utter breakdown of democratic controls as a result of Valencia’s poor regional governance.     

Memory,narration and spectrality in Brian Friel's Faith Healer and Frank McGuinness's Observe the Sons of Ulster Marching Towards the Somme

This article proposes an examination of how Brian Friel's Faith Healer functions as an intertext in Frank McGuinness's Observe the Sons of Ulster Marching Towards the Somme. This shall be the first extensive consideration of Frank McGuinness's debt to Faith Healer, the play that convinced him that drama was the form most suited to his vision. How both plays consider the relationship between history, memory and art will be a key concern. Attention shall also be paid to the shared cultural and historic traditions that unite both Friel and McGuinness. The essays that McGuinness has written on Friel will be shown to be as valuable in interpreting McGuinness's work as they are to illuminating Friel's. It shall be argued that McGuinness, far from merely parroting Friel's aesthetic, uses the earlier writer's legacy to create new and original works.     

Russia's Kosovo: A Critical Geopolitics of the August 2008 War over South Ossetia

A noted political geographer presents an analysis of the August 2008 South Ossetian war. He analyzes the conflict from a critical geopolitical perspective sensitive to the importance of localized context and agency in world affairs and to the limitations of state-centric logics in capturing the connectivities, flows, and attachments that transcend state borders and characterize specific locations. The paper traces the historical antecedents to the August 2008 conflict and identifies major factors that led to it, including legacies of past violence, the Georgian president's aggressive style of leadership, and renewed Russian "great power" aspirations under Putin. The Kosovo case created normative precedents available for opportunistic localization. The author then focuses on the events of August 2008 and the competing storylines promoted by the Georgian and Russian governments. Journal of Economic Literature, Classification Numbers: H10, I31, O18, P30. 7 figures, 2 tables, 137 references.     

Stronger together? Assessing the causal effect of inter‐municipal cooperation on the efficiency of small Italian municipalities

When local governments are small and fragmented, promoting inter‐municipal cooperation (IMC) among them is seen as a tool to improve the management of public services by reaping economies of scale and scope. Yet, the empirical evidence on the impacts of IMC on local governments' efficiency is scarce and inconclusive. In this paper, we investigate the experience of Italy's municipal unions (Unioni di comuni). We develop an index of technical efficiency by means of robust data envelopment analysis. We then exploit nearest‐neighbor matching and fuzzy regression discontinuity design estimators to explore whether municipal unions have any impacts on the administrative efficiency of member municipalities. We fail to find any strong, significant effect.     

Political and institutional constraints on structural reforms: interpreting the Italian experience

During 2011 Italy reached the verge of a financial default because of its huge public debt. Neither the centre-right nor the centre-left governments that alternated in power in the 2000s were able to introduce the reforms necessary for reducing the debt and promoting growth. The impotence of the government became incompatible with the requirements of the country's continued presence in the eurozone. In November 2011, under the pressure of financial markets and eurozone institutions and leaders, the incumbent centre-right government was obliged to resign, and was substituted by a government composed of technocrats and experts, the Monti government. This lasted until December 2012 and was supported in parliament by a cross-partisan coalition; it was able to introduce some of the structural reforms required, because of the threat of default but also because it did not need to seek the electoral support of powerful constituencies. This article advances an interpretation of the Italian crisis of November 2011, identifying the political and institutional structures and the specific political conditions that fostered a policy stalemate in the country in the 2000s and whose persistence makes the continuation of reforms after the February 2013 elections uncertain.     

The Politics of Caring for the Poor: Anglican Responses in 1890s Tasmania

Relieving poverty amongst skilled but unemployed workers during the Tasmanian economic collapse in the 1890s challenged both a conservative government's policy of avoiding public debt by initiating minimal relief and the limited financial and human resources of voluntary philanthropic agencies, the Anglican Church amongst them, whom the Tasmanian governments expected to carry the burden of delivering relief to those deemed to deserve it. With labour organisations too weak to lead, and amidst the silence of church leaders, it fell to individuals like the Reverend Archibald Turnbull to articulate a Christian socialist critique of government policies and values and to advocate the desperate plight of the poor. In this context, this study examines how contemporary government and Anglican Church leaders responded to Turnbull's political and pastoral initiatives in Hobart in 1893–96.     

PUBLIC SECTOR UNIONISM AND TAX BURDENS: ARE THEY RELATED?*

One factor that has affected state and local politics since the 1960's is the growth of public sector unionism. Conventional wisdom assumes that the “fist generation” of public unionism has been a major cause of the fiscal problems faced by many state and local governments in the 1970's. State level cross-sectional analysis (1960–71) questions this widely held assumption with respect to the impact of strike activity and collective bargaining legislation on the tax burden across the states.     

Alternative Ways of Financing Production

Based upon the work of C. H. Douglas, this paper explores the role of debt in the economy. In the 1920s Douglas observed the workings of financial mechanisms within the real economy, noting that they could be modified to achieve a socially and ecologically sustainable economics of sufficiency (see Hutchinson and Burkitt 1997; Hutchinson 1998). Douglas' exploration of the role of debt (loan credit) in the economy accords well with Veblen's institutional analysis (Veblen 1990), while his writing reverberates with Veblenian terminology. As an economist, Douglas is both intuitive and eclectic, and, as Mehta (1983) observes, ‘no writer in economics has made his thought so opaque to the reader.’ Nevertheless, Douglas' rejection by orthodoxy was due in no small measure to the impracticality of tailoring his theoretical observations within the constraints of neo-classical general free market equilibrium theory. Although they gave rise to a widespread popular movement, Douglas' proposals for debt-free finance of production could not be accommodated within economic orthodoxy.     

The Russian Steel Industry, 1990-2009

A noted specialist on Russia's industries surveys the restructuring of Russia's steel industry in response to the challenging conditions of the 1990s (collapsing domestic markets, the nonpayments crisis, and insider privatization) and its subsequent stabilization during the early years of the 21^st century due to effective implementation of a "survival model" at many plants. The author examines the major elements of that model, namely an export orientation made possible by relatively low labor and energy costs, reliable access to basic raw materials, a focus on crude (rather than specialty) steel, not inconsequential investment in process modernization, and effective control exercised by new private ownership. The paper's concluding section explores the new challenges faced by the industry due to the global financial crisis of late 2008-2009, and particularly the decline in world steel and company share prices, the extreme tightening of credit, the difficulties of servicing existing levels of debt, and provisions of a government assistance program that appear to preclude major capacity closures as a means of reducing costs. Journal of Economic Literature, Classification Numbers: D290, L610, O140, P230. 3 figures, 1 table, 97 references.     

Putin's Second Term Is Likely to Differ from His First: A Rebuttal

The author of "Russia's Economic Transformation under Putin" replies to comments and critical assessments of his paper by two prominent Western specialists on the Russian economy. His rebuttal to the more severe critic of the two emphasizes the prospective change in Putin's approach to economic reform during his second presidential term. The author believes that economic policymaking in the Kremlin, rather than the impact of world oil prices, will tend to shape Russia's considerable economic growth. Journal of Economic Literature, Classification Numbers: E60, E63, F13, H20, H60, P21. 8 references.     

Constructions of cosmopolitanism in teenage citizenship in Singapore

This study aims to uncover the geographies of places informing teenagers' understanding of cosmopolitanism and citizenship. Children and young people (CYP) in Singapore are becoming more internationally mobile and growing up in highly globalised Singapore. There are three overall arguments in this paper. First, the local is the actual place to situate studies on cosmopolitanism and that cosmopolitanism should be considered as a dimension of deterritorialised citizenship amongst CYP growing up in highly globalised nation-states. There are ‘roots and routes’ approaches to citizenship and my second argument is that the ‘routes approach’ to citizenship has ingrained cosmopolitan experiences into young people's life-worlds and is arguably the stronger approach of the two for young Singaporeans. Finally, this study demonstrates that the experiences of CYP in geographies of education [Holloway, S. L., P. Hubbard, H. Jöns, H. Pimlott-Wilson. 2010. “Geographies of Education and the Significance of Children, Youth and Families.” Progress in Human Geography 34 (5)] are credible yet neglected life-worlds that can help reconstitute frameworks for understanding cosmopolitanism and citizenship [Harvey, D. 2000. “Cosmopolitanism and the Banality of Geographical Evils.” Public Culture 12 (2)].     

Mapping Common Futures: Customary Communities,NGOs and the State in Indonesia's Reform Era

The post‐Suharto ‘Reform Era’ has witnessed explosive revitalization movements among Indonesia's indigenous minorities or ‘customary’(adat) communities attempting to redress the disempowerment they suffered under the former regime. This study considers the current resurgence of customary claims to land and resources in Bali, where the state‐sponsored investment boom of the 1990s had severe social and environmental impacts. It focuses on recent experiments with participatory community mapping, aimed at reframing the relationship between state and local institutions in planning and decision‐making processes. Closely tied to the mapping and planning strategy have been efforts to strengthen local institutions and to confront the problems of land alienation and community control of resources. The diversity of responses to this new intervention reflects both the vitality and limitations of local adat communities, as well as the contributions and constraints of non‐governmental organizations that increasingly mediate their relationships to state and global arenas. This ethnographic study explores participants’ experiences of the community mapping programme and suggests its potential for developing ‘critical localism’ through long‐term, process‐oriented engagements between communities, governments, NGOs, and academic researchers.