A comprehensive insight into Mancur Olson's work as well as extensions and applications of his work. Chapters cover three main areas: Collective Action, Institutional Sclerosis and Market-Augmenting Government. Some chapters directly assess Olson`s contributions, focusing on distinguishing what was original in his works from what was already in the literature, and assess his impact on the fields of public economics and economic history. Other chapters present new tests and frequently extend his work. Each of the chapters is a new piece of scholarship inspired by and intended to honor Mancur Olson, and extend his influence to another generation of Collective Choice scholars and researchers.

The literature argues that the presence of multiple veto players (government decisionmakers) with polarized interests increases the credibility of sovereign commitments, but reduces the ability of governments to adjust policies in the event of exogenous shocks that jeopardize their ability to honor their commitments. In the case of sovereign lending, if the first effect prevails, countries would be regarded as more creditworthy; if the second, less.Keefer and Knack address two issues. First, using measures of country creditworthiness, they ask whether the net effect of multiple veto players is positive or negative. Second, though, the authors go beyond the existing literature to argue that the net effect of multiple veto players depends on the nature of social polarization in a country. In particular, they argue that political competition is fundamentally different in countries exhibiting ethnic polarization than in countries polarized according to income or wealth. The evidence supports the prediction that multiple veto players matter more when countries are more ethnically polarized, but less when income inequality is greater.This paper - a joint product of the Investment Climate and Public Services Teams, Development Research Group - is part of a larger effort in the group to understand the interaction of social polarization and institutions.

Agenor attempts to examine analytically and empirically the extent to which globalization affects the poor in low- and middle-income countries. He begins with a description of various channels through which trade openness and financial integration may have an adverse effect on poverty. However, the author also stresses the possible nonlinearities involved-possibilities that have seldom been recognized in the ongoing debate. Agenor then presents cross-country regressions that relate measures of real and financial integration to poverty. The regressions control for changes in income per capita and output growth rates, as well as various other macroeconomic and structural variables, such as the inflation tax, changes in the real exchange rate and the terms of trade, health and schooling indicators, and macroeconomic volatility. The author uses not only individual indicators of trade and financial openness but also a "globalization index" based on principal components analysis, and tests for both linear and nonlinear effects. The results suggest the existence of a nonmonotonic, Laffer-type relationship between globalization and poverty. At low levels, globalization appears to hurt the poor; but beyond a certain threshold, it seems to reduce poverty-possibly because it brings with it renewed impetus for reform. So, globalization may hurt the poor not because it went too far, but rather because it did not go far enough.

The authors explore the differences in pollution control performance of industries with different types of ownership in China-state-owned (SOE), collectively- or community-owned (COE), privately owned (POE), companies with foreign direct investment (FDI), and joint ventures. About 1,000 industrial firms in three provinces of China were surveyed, and detailed 1999 firm-level information was obtained. The authors analyzed the differences between firms in receiving and reacting to environmental regulatory enforcement, community pressure, environmental services, as well as in the firm's internal environmental management among the different types of ownership. The authors also conducted econometric analyses on the determinants of pollution discharge performance. The results show that foreign direct investment and collectively-owned enterprises have better environmental performances in terms of water pollution discharge intensity, while state-owned enterprises and privately owned enterprises in China are the worst performers. The results also suggest that collectively-owned enterprises in China do internalize environmental externalities.

This paper examines the issue of estimating recurrent costs associated with capital projects in the investment budget. It is intended to help overcome budget planning problems which give rise to the chronic under-funding of maintenance and operating costs typical in some developing economies. The objective is to provide guidance in the preparation of budget submissions so that information on the future recurrent cost implications of today's capital spending is quantified in a way that supports the authorities in making project selection and budget decisions. The paper is in three parts. The first part outlines some concepts and definitions involved in measuring recurrent costs. The second part provides stylized examples of individual projects. And the third part presents some rough empirical guidance drawn from a sample of actual investment projects.