Rowman & Littlefield Publishers Knowledge and Incentives in Policy: Using Public Choice and Market Process Theory to Analyze Public Policy Issues (Economy, Polity, and Society)

Excerpt. © Reprinted by permission. All rights reserved. Knowledge and Incentives in Policy Using Public Choice and Market Process Theory to Analyze Public Policy Issues By Stefanie Haeffele Rowman & Littlefield International, Ltd.Copyright © 2018 Stefanie Haeffele All rights reserved. ISBN: 978-1-78660-397-5 Contents Introduction, vii, Part I: International Policy, 1 Can Governments Create Bureaucratic Structures That Overcome Knowledge and Incentive Problems?: An Analysis of the Millennium Challenge Corporation Rosemarie Fike, 3, 2 The Political Economy of Intervention in the Conflict against ISIS David Wille, 39, Part II: Federal Policy, 3 FDA Effectiveness Standards: Helpful or Harmful? Anna Rivers, 79, 4 Exit, Voice, and Incentives: An Institutional Analysis of Urban Public School Districts Rachel Reese, 97, Part III: State and Local Policy, 5 Firm-Specific Tax Incentives: The Bad and the Ugly Adam N. Michel, 131, 6 A Better Tomorrow: Policy Reform and the Limitations of State-Led Targeted Economic Development Courtney Michaluk, 167, 7 The Political Economy of Casino Licensing: A Case Study on Maryland ' s Experience Candace McTeer Mottice, 187, 8 The Political Economy of DC School Choice: An Institutional Analysis of the Opportunity Scholarship Program Allison Kasie, 207, 9 Stifling Urban Development with Land-Use Regulation: A Case Study of Redevelopment in Tysons Corner, Virginia Emily Hamilton, 243, Index, 271, Editor and Contributors, 289, CHAPTER 1 Can Governments Create Bureaucratic Structures That Overcome Knowledge and Incentive Problems? An Analysis of the Millennium Challenge Corporation Rosemarie Fike Since Adam Smith, economists have been fascinated with understanding what accounts for disparities in the levels of wealth of different nations. Smith ([1776] 1976) argues that the path to economic prosperity is through the increases in productivity that arise out of a highly specialized division of labor combined with trade openness and a government that does not burden its citizens with predatory taxation. P. T. Bauer (1984, 2000) echoes Smith's emphasis on engaging in both small- and large-scale trade, and both Smith and Bauer stress the importance of private property in order to accomplish this. These ideas have fallen in and out of favor with the economics profession throughout the years. The growing prestige of the international development aid community has resulted in a massive amount of research for alternative causal explanations for the disparity in the wealth of nations. For instance, Sachs (2001, 2003) and Sachs and Warner (2001) argue that geographic location is a factor in why some nations remain poor. Alternatively, La Porta et al. (2004); La Porta, Lopez-de-Silanes, and Schleifer (2008); and Glaeser and Shleifer (2002) argue that the legal origin of a country determines the differing levels of economic development. Additionally, Acemoglu, Johnson, and Robinson (2001, 2002) argue that a nation's level of wealth today is a result of the types of institutions, either productive or extractive, that were set in place at the time of colonization. There is also a constant back-and-forth in academia about the effect foreign aid assistance has on the development progress of recipient nations. Overwhelmingly, the failure of the aid community to achieve any significant results after 60 years and billions of dollars leads one to believe that, at best, their efforts are a wash. While economists have come to somewhat understand what does not cause economic development, there has been little progress in finding a panacea for what will. Mostly, this is because a panacea does not exist. William Easterly (2002a, 2002b, 2003, 2006) pleads with the aid community to stop looking for such a "magic bullet." Each impoverished nation is unique in the factors responsible for their present conditions. What unites many of these nations in their plight, however, is an institutional context that is not conducive to eco