Saumitra Jha, Associate Professor of Political Economy at Stanford’s Graduate School of Business, will present results from his recent research on political economy. The failure to align the incentives of self-interested groups in favor of beneficial reform is often seen as a major cause of persistent underdevelopment around the world. However, much less is known about strategies that have been successful at overcoming such political economy challenges. One approach that holds much promise, and in fact appears to have had some historical success, is the provision of financial assets that align the interests of winners and potential losers from reform by providing claims on the future. This project analyzes the promise and limitations of financial instruments as a means for fostering broad political coalitions that favor beneficial reforms. It draws upon theory and empirical evidence from a range of historical cases in which financial assets have succeeded or failed at making politics less conflictual over time, focusing on three revolutionary states that subsequently led the world in economic growth: England, the early United States and Meiji Japan. Finally, the project draws upon the theory and the historical cases to assess the promise of finance in solving political economy challenges in contemporary settings.
Financial Innovations and Political Development: Evidence from Revolutionary England
Sharing the Future: Financial Innovation and Innovators in Solving the Political Economy Challenges of Development