Emma Bell

'Large, unpleasant thugs'? The Penal Responsibilisation of Young People in France and the United Kingdom

Most young people who are put into custody are aged 16 and 17they are not children; they are often large, unpleasant thugs, and they are frightening to the public. In my judgement, the courts have been quite right to ensure that they are locked up, and locked up for a long time where they have committed grievous offences.

Jack Straw, Minister of Justice, 10 th June 2008 1 Les mineurs de 1945 n'ont rien à voir avec les géants noirs des banlieues d'aujourd'hui. Nicolas Sarkozy, 28th July 2006 2

Under successive New Labour administrations, it has become increasingly common to treat juvenile delinquents as entirely rational, fully responsible young adults rather than children, thus justifying their subjection to the full rigours of the criminal law. Indeed, the notion of juvenile responsibility has underpinned many recent penal trends, such as the lowering of the age of criminal responsibility, the increasing incarceration of minors and the creation of a range of new sentences. Although the juvenile and adult penal systems remain formally distinct, the treatment of juvenile delinquents now shares much in common with the treatment of adult criminals, leading one commentator to speak of the 'dejuvenilisation' of youth justice. 3 It has been argued that this trend is not unique to Britain but that it is common to many Western nations. 4 France is but one example in which a distinctly 'welfareoriented' approach to the problem of juvenile delinquency is currently threatened by a more punitive approach which emphasises individual over social responsibility. Symbolically, a special commission chaired by André Varinard, appointed by the current Minister of Justice, Rachida Dati, to review the law regarding young offenders, expressly chose to replace the word 'child' with that of 'minor' in its final 1 Jack STRAW, Hansard [on-line],

report. 5 This paper will seek first to identify the main trends in the treatment of juvenile delinquents in both Britain and France in recent years, before attempting to determine the reasons which lie behind the adoption of such a 'tough' approach to children who break the law.

Doli capax?

The most blatant attempt to responsibilise child offenders has been the lowering of the age of criminal responsibility. With article 34 of the Crime and Disorder Act 1998, the New Labour government reversed the common law principal of doli incapax according to which children between the ages of ten and fourteen were presumed to be 'incapable of evil' unless prosecutors could prove that they were aware that their actions were 'seriously wrong'. Although in England and Wales it has always been possible to imprison children as young ten for 'grave' crimes 6 , children of this age have, since the Children Act 1908, generally been spared criminal sanctions. However, following the 1998 Act, from aged ten children may be subject to a host of new non-custodial sanctions such as Anti-Social Behaviour Orders (ASBOs) 7 , Individual Support Orders (ISOs) 8 , Penalty Notices for Disorder (PNDs) 9 , Supervision Orders 10 , and Referral Orders 11 . In 2007, the New Labour government even suggested that all children should be obliged to undergo periodic testing throughout their development in order to identify those at risk of becoming 5 André VARINARD, Commission de propositions de réforme de l'ordonnance du 2 février 1945 relative aux mineurs délinquants [en ligne], December 2008. Available at: http://www.premier-ministre.gouv.fr/chantiers/justice_856/rapport_varinard_sur_reforme_61 850.html [accessed on 27 March 2009]. 6 Section 91 of the Powers of the Criminal Courts (Sentencing) Act 2000, which replaced Section 53 of the Children and Young Persons Act, permits the Crown Court to sentence a 'young person' to prison when they commit an offence for which an adult could receive at least fourteen years in custody. The length of the sentence can be anywhere up to the adult maximum for the same offence, which means that in theory a ten-year old may be sentenced to life imprisonment. 7 Infra., p. 10. 8 An ISO can be given to young people aged between 10 and 17, in addition to an ASBO. It stipulates that the young person attend support programmes which aim to tackle the causes of anti-social behaviour. Refusal to respect the conditions of such an order can lead to a fine. 9 PNDs are fines which may be handed out by the police against those responsible for behaviour which is likely to cause 'harassment, alarm or distress'. A recent pilot programme has used them against children as young as ten. 10 These are community penalties which may require young people to respect curfews, attend drug treatment programmes or to take part in a range of activities set by the local youth offending team, which could include repairing the harm caused by their offence. 11 The 1999 Youth Justice and Criminal Evidence Act requires that all first-time young offenders appear before a Youth Offending Panel, a committee composed of two volunteers from the local community and a juvenile justice specialist. The committee meets the parents or legal guardian of the offender and the offender himself in order to draw up a contract by which the young offender promises to make amends to his victims or to the community for his criminal acts. It is directly inspired by the principles of restorative justice. the delinquents of the future. 12 Currently, children aged between twelve and seventeen may be incarcerated in Secure Training Centres 13 , whilst those aged between fifteen and twenty-one may be committed to Young Offender Institutions 14 . There are currently 2726 youths aged under eighteen imprisoned in various different custodial institutions in England and Wales. As the graph below shows, there are currently 3 twelve-year-olds in custody, 30 thirteen year-olds, 123 fourteen-yearolds, 341 fifteen year-olds, 778 sixteen year-olds and 1451 seventeen year-olds. Youths under eighteen account for 2.7% of the total prison population of England and Wales 15 .

The age of criminal responsibility in Northern Ireland is the same. There are currently 234 young people under the age of eighteen incarcerated in the province's only young offender institution 16 . They account for 1.3% of the total prison population 17 . In Scotland, the age of criminal responsibility is the lowest in Europe, remaining at only eight years old. Young people under eighteen represent 3.1% 18 of the total Scottish prison population. However, in 2007/2008 just four of those serving a prison sentence were under sixteen. 19 This can largely be explained by Scotland's unique system of Children's Hearings. These specialised panels, composed of social workers and lay people rather than judges, were established in 1971 by the Social Work (Scotland) Act. They aimed to remove all but the most serious young offenders aged under sixteen from criminal courts by making a child's supervision by a social worker the only sentence available. The emphasis was clearly on welfare rather than punishment 20 . In Scotland, children under sixteen are generally only held in custody awaiting sentence if their behaviour is considered to be a cause for concern, in which case a court my issue then with an 'unruly certificate'. 21 The small number of under-16s held in custody in Scotland contrasts 12 Alan TRAVIS, 'Every child to be screened for risk of turning criminal under Blair justice plan', England and Wales would also appear to treat their children more severely than France in this respect. There, children under the age of eighteen represent just 1.1% of the overall prison population 23 . Although France has never officially set an age of criminal responsibility, the edict of 1945 (l'ordonnance du 2 février) which is generally considered to be the very foundation of a welfare-oriented youth justice system, stipulated that offenders under the age of eighteen should be subject to 'educational' rather than penal measures, except in the case of serious crimes. Children aged between thirteen and sixteen may be sent to prison for such crimes but they automatically benefit from the excuse de minorité according to which their sentence is to be reduced to half that of an adult sentence. Those aged between sixteen and eighteen benefit from the same sentence reduction provided that 'circumstances and their personality' do not make this impossible.

Yet, even if the 1945 edict states that criminal sanctions cannot be inflicted upon children under the age of thirteen, children as young as seven may be held criminally responsible provided the prosecution is satisfied that the child is capable of judging the gravity of his acts (in which case he will be subject to lesser sanctions than those of his elders). This principle was made clear in the 1945 edict and was reaffirmed by article 122(8) of the Code pénal following the law of 9 th September 2002 (la loi d'orientation et de programmation pour la justice). It is therefore wrong to suggest, as is sometimes the case, that the welfare-oriented 1945 edict, declares that minors are not held responsible before the criminal law. As Christine Lazergues and Jean-Pierre Balduyck have argued, such misconceptions result from a year that it planned to abolish such certificates in order to spare under-16s from custody (see BBC [on-line] misinterpretation of the law. 24 Nonetheless, the edict has been the subject of considerable criticism in recent years for being too lenient, frequently being referred to as the 'young offender's charter'. Consequently, recent legislative modifications have rendered the juvenile justice system more severe, notably by allowing minors aged over sixteen to be subject to the same penal sanctions as adults when they are convicted for the second time and by applying mandatory minimum sentences to children from the age of thirteen. 25 A stricter approach has also been adopted with regard to children aged between ten and thirteen. Following the law of 9 th September 2002, ten year-olds may now be made the subject of new 'educational sanctions' (sanctions éducatives) 26 . Although such sanctions have rarely been used27 , the desire on the part of the government to responsibilise children for their criminal acts is clear. Indeed, failure to respect the conditions of such measures can lead to the placement of children in a specialised 'educational' institution for a period of one month. According to one juvenile justice professional, these measures are distinctly coercive in nature, blurring the boundary between 'educational' and 'penal' measures. 28 Most recently, the Varinard Commission29 made the controversial recommendation of fixing the age of criminal responsibility at twelve. Up until now, France has been one of the few European countries not to have specifically defined such an age, which explains why children as young as seven may be held criminally responsible for their acts. Yet, rather than protecting children from the full rigours of the criminal law, it has been suggested that the commission's recommendations would actually render the law tougher, permitting the incarceration of children as young as twelve. Although the Minister of Justice approved the proposal, considering it to be one of 'common sense', she seemed to suggest that prison should only be used as a last resort. 30 The Prime Minister, François Fillon, almost immediately declared his opposition to the idea of imprisoning twelve year-olds and stated that the government had no plans to modify the current legislation in this respect. 31 In March 2009, Dati announced that the age of criminal responsibility would not be lowered in the future penal code for minors, which is intended to replace the 1945 edict. 32 Although there are concerns about some of the Ministry's most recent proposals, notably that of creating a 'special civil system' of law for the under-13s which would allow measures of a penal nature (such as the obligation to compensate the victim of crime) to be imposed on minors in civil courts, this approach would seem to contrast with that of England, Wales and Northern Ireland, where twelve year-olds are indeed incarcerated. Despite the punitive rhetoric of the Sarkozy administration, it might appear that France is currently resisting the most draconian aspects of youth justice policy à l'anglaise. As Sophie Genderot has stated, In France, an ideal of solidarity and consideration of life inequalities still prevail over punitiveness. A commitment to youth re-socialisation endures despite doubts about the efficacy of rehabilitation programmes. 33

L'exception française?

Despite the numerous reforms which have been made to the 1945 edict in recent years, the principle of child protection which it embodied remains firmly anchored in French law. Indeed, in its examination of the constitutionality of the law of 9 September 2002, the Conseil constitutionnel re-affirmed the constitutional status of the principle outlined in 1945 according to which juvenile delinquents should be dealt with by specialist tribunals which must take into consideration the age and personality of each offender in order to determine the measures which are best adapted to their particular needs. 34 The need to educate and protect the juvenile delinquent was also reaffirmed by the justice minister herself, who declared that punishment must be first and foremost about education, and that the principle according to which the juvenile delinquent must be regarded as a minor in danger should not be undermined. 35 The continued focus on education appears to be clear in the creation of specialised penal establishments for children aged between thirteen and seventeen by the law of 2002 -Établissements Pénitentiaires pour Mineurs (EPM) adult prisons. Although these new institutions are totally secure, the emphasis is intended to be placed on education rather than punishment, with the adolescent following at least twenty hours of teaching per week as well as up to forty hours of sporting and cultural activities. Yet, some commentators fear that the creation of such establishments may only encourage the increased incarceration of children, leading to the erosion of the welfare model. 36 In addition, the capacity of these centres to 'protect' children was seriously called into question following the suicide of a sixteen year-old at an EPM in Meyzieu, near Lyon in February 2008. 37 It may of course be asked whether coercion is really the best way to educate young offenders. Yet, coercion lies behind even the educational sanctions which are intended to be non-penal: as we have indicated, failure to respect these measures may lead to a juvenile being placed in a closed institution. Those aged over thirteen may be sent to a Centre Éducatif Fermé (CEF), also created by the law of 2002. Although these centres are 'open' and not intended to be penal in nature, a minor who 'escapes' from a CEF may be placed under a supervision order. Failure to respect such an order may lead to the minor being remanded in custody.

Given the coercive nature of the welfare approach, the exceptionality of the French situation would thus seem to be wholly superficial. Indeed, as in the United Kingdom, it would seem that the introduction of an increasing number of 'educational' and 'welfare' measures alongside penal measures has only served to disguise the increasingly punitive nature of youth justice.

Punishing through welfare

Although New Labour sought to 'draw a line under the past and set out a new approach to tackling youth crime' by 'tackling the excuse culture' of the youth justice system 38 , like France it did not entirely abandon a welfare approach to the problem. It could even be said that it actually widened the scope of such an approach by moving responsibility for youth justice out of the hands of the Home Office by creating the Youth Justice Board by the Crime and Disorder Act 1998. This is a specialised independent committee responsible for supervising the functioning of the youth justice system, advising the Home Secretary in this respect and, most importantly, working with the social services to develop a joint strategy to prevent crime and to divert young people from the penal system. Thus, Youth Offending Teams were set up, involving local authorities, social workers, probation officers, police officers, health and education workers and members of voluntary organisations. The teams were given a statutory duty to work together to tackle the causes of crimedrug abuse, educational failure, family problems etc. Given the 36 Christine LAZERGUES, 'La mutation du modèle protectionniste de justice des mineurs', Revue de science criminelle et de droit pénal comparé, n°1, 2008, p. emphasis placed on prevention, the reform was welcomed by the large majority of professionals working in this area. [START_REF] Tim | Tackling Youth Crime and Reforming Youth Justice: The Origins and Nature of New Labour Policy[END_REF] The range of new penal sanctions created also sought to place as much emphasis on the rehabilitation as the punishment of the offender. For example, the new custodial measure, the Detention and Training Order (DTO), aimed at young people aged between twelve and seventeen who are considered to be recidivists and dangerous, stipulated that henceforth half of the sentence (which may be anywhere between 4 and 24 months) must be served in the community where the young offender is required to attend various rehabilitation programmes. However, it is this very 'welfare' element which has meant that the sanction has proved to be even more severe than previous sentences which required juveniles to serve their whole sentence in custody. Given the desire of judges to rehabilitate the young offender, they have been more willing to impose such a sentence on children aged between twelve and fourteen. [START_REF] Neal | Detention and Training: Assessment of the Detention and Training Order and its impact on the secure estate across England and Wales [on-line[END_REF] Similarly, the Intensive Supervision and Surveillance Programme (ISSP) targets children aged between ten and seventeen. It may be used as the second stage of a DTO or used as an alternative sentence to imprisonment. Those subject to a Supervision Order under the programme must attend a specified number of educational or treatment programmes and accept to be placed under surveillance, usually via an electronic tag. Failure to respect the order may lead to the offender being placed in custody. Such was the case for 33% of all those placed under the order between 2001 and 2003. [START_REF]Intensive Supervision and Surveillance Programme: The final report[END_REF] NACRO (The National Association for the Care and Resettlement of Offenders) has found that these orders can have a significant net-widening effect, replacing other, less intensive non-custodial penalties. [START_REF] Nacro | A Better Alternative : Reducing child imprisonment[END_REF] It has consequently been extremely difficult for New Labour to reconcile the apparently conflicting aims of prevention and punishment, as the 550% explosion in the numbers of young people aged being ten and fourteen being sentenced to custody between 1996 and 2006 would suggest. [START_REF] Barnardo's | Locking up or giving upis custody for children always the right answer[END_REF] Indeed, custody accounted for 64% of the overall budget of the Youth Justice Board in 2007, compared to just 5% allocated to the ISSP. [START_REF] Enver | Ten Years of Labour's Youth Justice Reforms: An independent audit[END_REF] Consequently, the welfare approach to juvenile offending has been undermined as funding has been diverted from social services, health and education. 45 It may have been thought that Gordon Brown's decision to grant the newly formed Department for Children, Schools and Families and the new Ministry of Justice joint responsibility for youth justice would have fostered the development of a more welfare-oriented approach to the youth crime problem. Indeed, together with the Home Office, they published a new Youth Crime Action Plan [START_REF] Hm Government | Youth Crime Action Plan[END_REF] in July 2008 in which the government promised that £100 million would be made available for support and prevention. Under the plan, a duty is to be placed on local authorities to fund the education of young people in custody and more support is to be given to youths leaving custody. In addition, family intervention projects are to be extended to provide help and support to families whose children are considered to be most at risk of falling into crime.

However, as before, welfare measures are underpinned by coercion: the projects will carry non-negotiable terms and sanctions are promised for those who fail to engage. In addition, tougher measures are announced for the parents of child offenders who fail to complete their sentence. Once again, the approach resembles that of France where 'Councils for the Rights and Duties of Families' (Conseils pour les droits et les devoirs des familles) were set up by the law of 5 March 2007 (loi relative à la prévention de la délinquance), with the stated aim of providing support to parents. Yet, failure to respect parental obligations will enable the local mayor to force the parent(s) to sign a contract of parental responsibility, breach of which will lead to the suspension of welfare benefits.

Responsibilising the young

The adoption of such tough measures alongside welfare measures is justified in both France and the UK by the need to reinforce individual responsibility (of both parents and young offenders themselves), the lack of which is considered to be the principal cause of crime. This viewpoint was made clear by Jack Straw in his introduction to the 1997 White Paper, No More Excuses:

An excuse culture has developed within the youth justice system. It excuses itself for its inefficiency, and too often excuses the young offenders before it, implying that they cannot help their behaviour because of their social circumstances. Rarely are they confronted with their behaviour and helped to take more personal responsibility for their actions. [START_REF] Home | No More Excuses[END_REF] Consequently, all efforts to tackle the causes of crime, just like crime itself, tend to focus on individual responsibility. The measures aimed at supporting families focus on the individual failings of parents, just as efforts to tackle the problems of youth, such as unemployment, focus on the behaviour of the jobseekers themselves. In doing so, both the French and British governments ignore the role that their own policies may play in exacerbating the problems of youth which give rise to crime.

For example, the New Deal for Young People, introduced by the New Labour government in 1997, focuses entirely on the adaptation of young people to the labour market. No attempt is made to address the problems of the labour market itself which tends to favour short-term employment in low-paid jobs. Consequently, the programme has not been as successful as the government claims: it is estimated that two out of five young people aged under twenty-five find themselves back on the unemployment register just six months after starting their new job. 48 In today's flexible labour market, young people are no longer valued as the employees of the future, worthy of investment and meaningful training, but rather as 'human capital' to be used and discarded at will.

In the past, the need to invest in young people filtered into criminal justice philosophy which emphasised rehabilitation over punishment. This philosophy was clear in the preamble to the French edict of 1945 which stated:

There are few problems as serious as those concerning the protection of childhood, in particular those which concern the fate of children brought before the courts. France does not have such an abundance of children that it can afford to neglect anything that might make them into good citizens. [START_REF]Il est peu de problèmes aussi graves que ceux qui concernent la protection de l'enfance, et parmi eux, ceux qui ont trait au sort de l'enfance traduite en justice[END_REF] Such a viewpoint can be starkly contrasted with the adoption of policies which tend to encourage the exclusion rather than the reintegration and rehabilitation of young people. Children who do not respect school discipline are routinely excluded from school: it is estimated that approximately 10,000 pupils are permanently excluded from school each year in Great Britain. Between 8 and 13 pupils per 10,000 pupils are excluded a year in England and Wales, whilst 4 per 10,000 are excluded in Scotland. 50 Throughout the UK, children found guilty of 'anti-social behaviour' may be also excluded from certain geographical areas. Indeed, research has found that the Anti-Social Behaviour Order (ASBO), a civil order carrying a prison sentence of up to five years for breach, disproportionately targets children, particularly poor children suffering from family problems, educational difficulties, abuse and crime [START_REF] Justice Board | Anti-Social Behaviour Orders: Summary[END_REF] . The behaviour of young people, such as 'hanging around' and playing games in inappropriate areas, is specifically targeted by this legislation. For example, a fifteen year-old boy was given an ASBO banning him from using a bus shelter as a football goal post on account of the fact that his behaviour bothered cars, pedestrians and the users of public transport. [START_REF] Harry | Anti-Social Behaviour Orders: An Analysis of the First Six Years[END_REF] Similarly in France, the non-criminal behaviour of young people was specifically targeted by the law of 18 March 2003 which created the new criminal offence of 'hanging about the hallways and staircases of buildings'. In addition, as we have seen, in both France and Britain children who fail to respect the law are increasingly excluded from society and detained in custodial institutions.

Feral Youth?

Rather than being valued as the future of the nation, young people are increasingly perceived as being a threat to society. A report published by the Institute for Public Policy Research (IPPR) highlighted the problem of what it describes as 'paedophobia', citing evidence that British people are more likely than their European counterparts to be afraid of young people and to hold them responsible for crime and antisocial behaviour. [START_REF] Julia | Freedom's Orphans: Raising Youth in a Changing World[END_REF] In 2008, the children's charity, Barnardo's, commissioned a poll which discovered that 49% of British people believe that children are increasingly a danger to each other and to adults, many of them describing children as 'feral'. 54 The British press certainly helps to fuel such perceptions of young people, often describing them as 'thugs' and 'yobs'. Such discourse has even been taken up by government and certain members of the judiciary. Recently, a Crown Court judge in Liverpool made the headlines when he declared that Britain is 'bedeviled by wild feral youth'. [START_REF] James | Judge blames ministers for yob terror[END_REF] When in power, Tony Blair spoke about the need to tackle 'yob culture' [START_REF]Blair's speech to the Labour Party Conference[END_REF] . Although Gordon Brown has not openly used such terms since becoming Prime Minister, he has declared that 'kids are out of control' [START_REF] Brown | Britain's Mean Streets[END_REF] and his justice secretary, Jack Straw, has continued to use the discourse of the Blair years by describing young offenders as 'thugs'. 58 Similarly, in France, Nicolas Sarkozy, when Home Secretary, famously described the young people of a disadvantaged Paris suburb as racaille. 59 Yet the notion that contemporary young people have become threatening monsters is largely unfounded. Although, according to government statistics, in England and Wales the highest rate of male offending for indictable offences is to be found amongst 17-year-olds (amongst 15-year-olds for female offending), the overall rate of offending amongst minors has actually remained quite stable over the past ten years. [START_REF] Ministry | Criminal Statistics England and Wales[END_REF] Self-report studies have confirmed this trend. [START_REF] Home | Young People and Crime: Findings from the 2006 Offending, Crime and Justice Survey[END_REF] Nonetheless, there has been particular concern over the apparent surge in the number of violent crimes, particularly knife crimes, committed by young people, following a series of muchpublicised stabbings. Consequently, the press has repeatedly referred to the existence of a growing 'knife culture' in the UK. Yet an independent report published by the Centre for Crime and Justice Studies at King's College, London, has found that between 1995 and 2006, the use of knives in crimes of violence has actually remained quite constant. [START_REF] Centre For | Knife Crime: Ineffective reactions to a distracting problem? A Review of Evidence and Policy[END_REF] Moreover, the report found that the proportion of murders involving a knife has actually decreased since 1995. 63 Yet, it is true that some children do carry knivesa recent poll shows that they represent about 2 per cent of young people in England aged between twelve and seventeen. [START_REF]The Children's Commissioner[END_REF] The statistics concerning knife crime have been the focus of much debate and controversy in both the press and in Parliament but, whatever the true extent of the problem, it is patently wrong to present children who carry knives as threatening monsters. Indeed, it is often overlooked that children tend to do so not out of criminal intent but rather out of feelings of fear and insecurity. 65 Rather than demonising young offenders and advocating ever stricter penalties for their crimes, it ought to be recognised that the problem may have its sources in social inequality. As Richard Wilkinson, a social epidemiologist has argued, most crimes of violence are motivated by the desire to attract attention and the respect of one's peers. [START_REF] Wilkinson | The Impact of Inequality[END_REF] In France, too, youth crime is represented as a growing problem, with Nicolas Sarkozy claiming that young people are becoming ever more criminal and that the 1945 edict is no longer adequate to deal with the growing problem. [START_REF] Cf | speech at Hôtel de Beauvau[END_REF] . In reality, however, crime committed by minors under the age of eighteen accounts for 18% of all recorded crime in France, a figure which has remained fairly constant over the past ten years, even decreasing by nearly 4% since 1998. 68 It would consequently appear that claims of an increasingly criminal and 'feral' youth are somewhat exaggerated. Indeed, as Geoffrey Pearson has shown, concerns about the growing criminality of young people is nothing new but has rather been a constant concern at least since the Nineteenth Century. 69 Although the moral panics of the past often resulted in a temporary tightening of the law, they did not promote the sea change in youth justice policy that we are currently witnessing today. Indeed, never before has merely troublesome behaviour, such as 'hanging around' in the streets, been so routinely redefined as criminal behaviour. In contemporary Britain and France, more and more youths are being pulled into the penal system, not because of their criminal actions but rather because of who they are. As a breakdown of the youth custody population shows, these children are problem children rather than criminal children. Barnardo's has compiled figures comparing the number of children in the general population experiencing certain problems and those in the prison population who have the very same problems. For example, whereas 6% of children in England have been excluded from school, 83% of the youth prison population has been so excluded. 70 Whereas those who have lived in care or had previous involvement with the social services represent 3% of all children, they represent 50% of children in prison. 71 This is perhaps not surprising given that such social disadvantages are often cited as being among the principal causes of crime. 72 However, the fact that such disadvantaged children find themselves in prison at all demonstrates a failure of the welfare system to tackle these problems at source and thus prevent crime before it occurs. Indeed, it would seem that twelve years of a New Labour government has had little impact on the problems facing young people in modern society. Despite its investment in education and the setting up of numerous programmes such as Sure Start 73 and Youth Inclusion Programmes 74 , designed to provide children with the best possible start in life, combined with Blair's personal commitment to abolish child poverty by 2020, the lives of many of Britain's children are blighted by poverty and social disadvantage. Indeed, in 2007 a UNICEF study of child wellbeing in 21 industrialised countries placed Britain at the bottom of the 73 There are currently over 500 Sure Start programmes throughout the UK. They aim to offer a whole range of services to families with children aged under four who live in disadvantaged areas. For more information, see http://www.surestart.gov.uk/ 74 These programmes organise extra-curricular activities for children aged between 8 and 17 who local authorities consider to be most at risk of falling into crime. of relative poverty and deprivation, the quality of children's relationships with their parents and peers, health, substance abuse and subjective well-being. 75 Homelessness is a major problem for young people, with estimates suggesting that one out of every 100 young people aged between sixteen and twenty-four experiences some form of homelessness every year. 76 Although the number of British children living in poverty fell from 3.4 million in 1998/1999 to 2.7 million in 2004/2005, it has since been on the rise again, meaning that the government is currently far from achieving its target of 1.7 million by 2010/2011. 77 On the contrary, we can only assume that the situation is likely to get worse in the current economic climate. Consequently, the results of a recent Europe-wide study of happiness which show that British youths feel alienated and are least likely to have a sense of belonging should come as no surprise. 78 Overall, the UK ranked 13 th out of 22 countries surveyed, with France finding itself in 16 th place. Indeed, the problems of young people in France are also numerous, with unemployment amongst those aged under twenty-five rising at twice the rate of that of the adult population. 79 Although the rate of child poverty remains considerably lower than in the UK, estimated at about 1 million children, poverty affects children much more than it does the rest of the population. 80

Conclusion

If New Labour's social and crime policies have been unsuccessful with regard to young people, it may be because they are underpinned by a strict moralising discourse, aiming solely at the responsibilisation of young people and failing to recognise the negative impact that government policies themselves may have on the problem. Without a drastic change of direction in social policy, it is likely that young people will continue to be demonised and that crime will continue to represent a major public concern. Yet, it would appear to be in the interests of governments who follow socially divisive economic policies to fuel public fear of young people. This allows them to define the social problems arising from these same policies in terms of individual rather than state responsibility. Moreover, in a competitive neoliberal economy in which dreams of full employment have long since been abandoned, there is less interest in investing in the citizens of the future. It is this ideological convergence between Britain and France, as with many other Western countries at the present time, which may allow us to understand the policy convergence between them, not just with regard to youth justice, but with regard to a whole range of social policies.

Perhaps the picture is not one of complete doom and gloom, however. There is a possibility that the current financial crisis will cause the ideological foundations of neoliberalism to be called into question, provoking a crisis of legitimacy for the neoliberal state. In such a situation, a complete policy rethink may occur. However, it is also possible that the very opposite could turn out to be the case, with the state becoming ever more authoritarian in order to cling to power. Indeed, it might be suggested that the new approach to social and crime policy adopted by New Labour was itself a response to the crisis of legitimacy resulting from the socially destructive neoliberalism of the Thatcher years: greater interventionism in the social sphere allowed the Blair and Brown administrations to give neoliberalism a human face. In reality, however, as we have pointed out, greater social interventionism has acted as a cloak for moral and penal authoritarianism.

Although the overall picture of the youth justice systems in the UK and France is one of punitiveness, regional divergences should not be overlooked. Although the youth justice system in Wales is closely tied to that of England, the two nations sharing the same legal system and a single Youth Justice Board, the Welsh Assembly has sought to differentiate its policy from that of England by locating youth justice services in the portfolio of Health and Social Services rather than that of Crime Prevention. 81 In addition, the All Wales Youth Offending Strategy made it clear that Wales would attempt to treat young people as children first and offenders second. 82 Yet, whilst overall responsibility for youth justice system remains with Westminster, it is doubtful how far this objective may be realised. Northern Ireland has been a pioneer in the UK with regard to the development of an alternative, informal youth justice system based on restorative justice. However, the incorporation of the system into the formal justice system via the Justice (Northern Ireland) Act 2002 may leave it open to the same punitive trends as may be seen in England. 83 Indeed, as we noted above, the number of youths incarcerated in Northern Ireland remains high. Finally, Scotland's system of Children's Hearings has ensured that it has so far followed a more distinctively welfare-oriented approach than in England. 84 Yet, there too a punitive approach has been applied to those who fall outside this system, resulting in the harsh penal treatment of young people over the age of sixteen. In the final analysis, although punitive trends are not The British Journal of Criminology, 2002, vol. 42, n° 3: 534-562. 84 Peter DUFF and Neil HUTTON (eds.), Criminal Justice in Scotland, Aldershot: Dartmouth Publishing Ltd., 1999.

0 500 1000 1500 12 13 14 15 16 17 Under 18 secure population in England and Wales by age 22

  The Guardian, [on-line], 28 March 2007. Available at: http://www.guardian.co.uk/ crime/article/0,,2044296,00.html [accessed on 27 March 2009]. 13 These are purpose-built centres for offenders aged between 12 and 17. They are operated by private companies under contract to the Home Office. 14 These are specialised custodial institutions for young offenders aged between 15 and 21, run by both the Prison Service and private contractors. 15 INTERNATIONAL CENTRE FOR PRISON STUDIES [on-line], King's College, London. Available at: http://www.kcl.ac.uk/depsta/law/research/icps/worldbrief/wpb_country.php? country=169 [accessed on 27 March 2009]. 16 NORTHERN IRELAND PRISON SERVICE [on-line]. Available at: http://www.niprison service.gov.uk/module.cfm/opt/8/area/Population/page/population/ [accessed on 27 March 2009]. 17 INTERNATIONAL CENTRE FOR PRISON STUDIES, op. cit.

	with the case of England and Wales where 496 young people of this age are held in
	a penal establishment.
	18 Ibid.
	19 THE SCOTTISH GOVERNMENT, Prison Statistics Scotland 2007/2008 [on-line], table
	21. Available at: http://openscotland.gov.uk/Publications/2008/08/14143909/39 [accessed on
	27 March 2009].
	20 F. M. MARTIN and Kathleen MURRAY (eds.), The Scottish Juvenile Justice System,
	Edinburgh: The Scottish Academic Press, 1982.
	21 Such certificates were initially created by the Children Act 1908. In 2007/2008, there were
	13 young people aged under sixteen held in custody under such a certificate: The Scottish
	Government, Table 18, op. cit. Available at: http://openscotland.gov.uk/Publications/
	2008/08/14143909/36 [accessed on 27 March 2009]. The Scottish government announced last

  . Previously, all children sentenced to custody were held in special wings of chantiers/justice_856/rapport_varinard_sur_reforme_61850.html [accessed on 27 March 2009]. 31 Alain SALLES, 'Prison à 12 ans : M. Fillon désavoue Mme Dati', Le Monde, 7 December 2008. 32 Alain SALLES, 'Le futur code pénal des mineurs moins dur qu'annoncé', Le Monde, 17 March 2009. 33 Sophie GENDEROT, 'France: The Politicisation of Youth Justice', p. 55 in John MUNCIE and Barry GOLDSON (eds.), Comparative Youth Justice: Critical Readings, London: Sage, 2006. 34 Conseil Constitionnel, decision n° 2002-461 DC, 29 August 2002. 35 'À l'égard d'un mineur, sanctionner c'est d'abord faire oeuvre de pédagogie. Le principe selon lequel le mineur délinquant est aussi un mineur en danger ne doit pas être remis en cause.' Rachida DATI, op. cit.

  206. 37 Cf. Commission nationale de déontologie de la sécurité, saisie n°2008-21 [on-line report]. Available at: http://www.cnds.fr/ra_pdf/reponses_fev_09/Avis_2008_21.pdf [accessed on 27 March 2009]. 38 HOME OFFICE, No More Excuses: A new approach to tackling youth crime in England and Wales [on-line], November 1997. Available at: http://www.homeoffice.gov.uk/documents /jou-no-more-excuses?view=Html [accessed on 27 March 2009].

  table in terms 68 DIRECTION CENTRAL DE LA POLICE JUDICIAIRE, Criminalité et délinquance constatées en France par les services de police et les unités de gendarmerie: année 2007 [online], p. 54. Available at: http://lesrapports.ladocumentationfrancaise.fr/BRP/084000201/ 0000.pdf [accessed on 27 March 2009].

	69 Geoffrey PEARSON, Hooligan: A History of Respectable Fears, Basingstoke: Macmillan,
	1983.
	70 BARNARDO'S, op. cit.
	71 Ibid.
	72 Cf. http://www.homeoffice.gov.uk/crime-victims/reducing-crime/youth-crime/ [accessed on
	27 March 2009].

  Report Card 7, Child Poverty in Perspective: An overview of Child well-being in rich countries, 2007. 76 Deborah QUILGARS, Sarah JOHNSEN and Nicholas PLEACE, Youth Homelessness in the UK: A decade of progress? [on-line], p. 21. Available at: http://www.jrf.org.uk/sites/files /jrf/2220-homelessness-young-people.pdf [accessed on 27 March 2009]. 77 CHILD POVERTY ACTION GROUP, Child Poverty: The Stats [on-line], October 2008. Available at: http://www.cpag.org.uk/info/briefings_policy/CPAG_poverty_the_stats_1008 .pdf [accessed on 27 March 2009]. 78 Martin BECKFORD, 'British youths are most alienated in Europe, a new happiness league table claims', The Daily Telegraph [on-line], 23 January 2009. Available at: http://www.telegraph.co.uk/news/worldnews/europe/4323513/British-youths-are-mostalienated-in-Europe-new-happiness-league-table-claims.html [accessed on 27 March 2009].

	79 Le Figaro [on-line], 25 March 2009. Available at: http://www.lefigaro.fr/flash-
	actu/2009/03/25/01011-20090325FILWWW00483-2009-hausse-des-jeunes-chomeurs.php
	[accessed on 27 March 2009].
	80 CONSEIL DE L'EMPLOI, DES REVENUS ET DE LA COHESION SOCIALE, Les
	Enfants Pauvres en France [on-line], 2004. Available at: http://lesrapports.
	ladocumentationfrancaise.fr/BRP/044000076/0000.pdf [accessed on 27 March 2009].

75 UNICEF,

  81 John MUNCIE, Youth and Crime, London: Sage, 2006, p. 275. 82 WELSH ASSEMBLY/ YOUTH JUSTICE BOARD, All Wales Youth Offending Strategy [on-line], 2004. Available at: http://wales.gov.uk/dsjlg/publications/commmunitysafety/youth offendingstrategy/strategye?lang=en [accessed on 27 March 2009]. 83 Kieran McEVOY and Harry MIKA, 'Restorative Justice and the Critique of Informalism in Northern Ireland',

Christine LAZERGUES and Jean-Pierre BALDUYCK, Réponses à la délinquance des mineurs, Rapport au Premier ministre par la Mission interministérielle sur la prévention et le traitement de la délinquance des mineurs, Paris: La documentationfrançaise, 1998, pp. 135- 136.

 25 Cf. The law of 11 th August 2007 on the fight against recidivism (la loi de lutte contre la récidive

).26 There are currently six such sanctions: the confiscation of the object with which the young offender committed his crime; the exclusion of the young offender from the place where the crime was committed (with the exception of his home) for a maximum of one year; forbidding him from meeting or contacting the victims of his offending behaviour (for a maximum period of one year); forbidding him from meeting or contacting his partners in crime (for a maximum period of one year); obliging him to make reparation for his crime; obliging him to follow a course in 'civic education' for a maximum of one

month.27 In 2004, only 37 such measures out of a total of 31,420 different sanctions were made against juvenile delinquents. French Ministry of Justice [on-line]. Available at: http://www.justice.gouv.fr/index.php?rubrique=10042&ssrub rique=10271 [accessed on 27

March 2009].28 Didier PEYRAT, 'Le rappel à l'ordre, modèle de la nouvelle prévention ?', Actualité Juridique Pénal

, 2006, p.

 350. 29 Op. cit.30 Rachida DATI, speech at the Hôtel de Bourvallais following the publication ofthe Varinard Report, 3 December 2008 [on-line]. Available at: http://www.premierministre.gouv.fr/

uniform, they are rather ubiquitous on both a national and international scale, threatening to completely overwhelm any remaining genuine welfare-based approaches to youth justice.


Abderemane Morame
email: morame@math.univ-nantes.fr

Françoise Truc
email: francoise.truc@ujf-grenoble.fr

Magnetic bottles on geometrically finite hyperbolic surfaces

We consider a magnetic Laplacian -∆ A = (id + A) ⋆ (id + A) on a hyperbolic surface M, when the magnetic field dA is infinite at the boundary at infinity. We prove that the counting function of the eigenvalues has a particular asymptotic behavior when M has an infinite area. 1

Introduction

We consider a smooth, connected, complete and oriented Riemannian surface (M, g) and a smooth, real one-form A on M. We define the magnetic Laplacian

-∆ A = (i d + A) ⋆ (i d + A) , ( (i d + A)u = i du + uA , ∀ u ∈ C ∞ 0 (M; C) ) .
(1.1)

The magnetic field is the exact two-form ρ B = dA .

If dm is the Riemannian measure on M , then

ρ B = b dm , with b ∈ C ∞ (M; R) . (1.2)
The magnetic intensity is b = | b| .

1 Keywords : spectral asymptotics, magnetic bottles, hyperbolic surface.

1

It is well known, (see [Shu] ), that -∆ A has a unique self-adjoint extension on L 2 (M) , containing in its domain C ∞ 0 (M; C) , the space of smooth and compactly supported functions.

When b is infinite at the infinity, (with some additional assumption), the spectrum of -∆ A is discrete, and we denote by (λ j ) j the increasing sequence of eigenvalues of -∆ A , (each eigenvalue is repeated according to its multiplicity). Let

N(λ) = λ j <λ 1 . (1.3)
We are interested by the hyperbolic surfaces M, when the curvature of M is constant and negative.

In this case, when M has finite area, the asymptotic behavior of N(λ)

seems to be the Weyl formula :

N(λ) ∼ +∞ λ 4π |M| .
S. Golénia and S. Moroianu in [Go-Mo] have such examples.

In the case of the Poincaré half-plane, M = H , we prove in [Mo-Tr] that the Weyl formula is not valid : lim

λ→+∞ λ -1 N(λ) = +∞ . For example when b(z) = a 2 0 (x/y) 2m 0 +a 2 1 y m 1 +a 2 2 /y m 2 , a j > 0 and m j ∈ N ⋆ , then N(λ) ∼ +∞ λ 1+1/(2m 0 ) ln(λ)α(m 0 , m 1 , m 2 ) .
In this paper, we are interested by the hyperbolic surfaces with infinite area. When M is a geometrically finite hyperbolic surface of infinite area and when the above example is arranged for this new situation, (m 0 is absent, m 1 appears in the cusps and m 2 in the funnels), we get

N(λ) ∼ +∞ λ 1+1/m 2 α(m 2 ) :
the cusps do not contribute to the leading part of N(λ) .

Main result

We assume that (M, g) is a smooth connected Riemannian manifold of dimension two, which is a geometrically finite hyperbolic surface of infinite area; (see [Per] or [Bor] for the definition and the related references). More precisely

M = J 1 j=0 M j J 2 k=1 F k ; (2.1)
where the M j and the F k are open sets of M, such that the closure of M 0 is compact, and if J 1 > 0 , the other M j are cuspidal ends of M, and the F k are funnel ends of M. This means that, for any j, 1 ≤ j ≤ J 1 , there exist strictly positive constants a j and L j such that M j is isometric to S×]a 2 j , +∞[ , equipped with the metric

ds 2 j = y -2 ( L 2 j dθ 2 + dy 2 ) ; (2.2) (S = S 1 is the unit circle.)
In the same way, for any k, 1 ≤ k ≤ J 2 ,there exist strictly positive constants

α k and τ k such that F k is isometric to S×]α 2 k , +∞[ , equipped with the metric ds 2 k = τ 2 k cosh 2 (t)dθ 2 + dt 2 ; (2.3)
moreover, for any two integers j, k > 0 , we have

M j ∩ F k = ∅ and M j ∩ M k = F j ∩ F k = ∅ if j = k .
Let us choose some z 0 ∈ M 0 and let us define

d : M → R + ; d(z) = d g (z, z 0 ) ; (2.4) d g ( . , .
) denotes the distance with respect to the metric g.

We assume the smooth one-form A to be given such that the magnetic field b satisfies lim

d(z)→∞ b(z) = +∞ . (2.5) If J 1 > 0 , there exists a constant C 1 > 0 such |X b(z)| ≤ C 1 (b(z) + 1)e d(z) |X| g ; (2.6) ∀ z ∈ M j , ∀ X ∈ T z M and ∀ j = 1, . . . J 1 .
There exists a constant C 2 > 0 such

|X b(z)| ≤ C 2 (b(z) + 1)|X| g ; (2.7) ∀ z ∈ F k , ∀ X ∈ T z M and ∀ k = 1, . . . J 2 .
For any self-adjoint operator P , and for any real λ , we will denote by E λ (P ) its spectral projection, and when its trace is finite we will denote it by N(λ; P ) = T r(E λ (P )) .

N(λ; P ) is the number of eigenvalues of P , (counted with their multiplicity), which are in ] -∞, λ[ .

Theorem 2.1 Under the above assumptions, -∆ A has a compact resolvent and for any δ ∈ ] 1 3 , 2 5 [ , there exists a constant C > 0 such that

1 2π M (1 - C (b(m) + 1) (2-5δ)/2 ) N (λ(1 -Cλ -3δ+1 ) - 1 4 , b(m)) dm ≤ N(λ, -∆ A ) ≤ (2.8) 1 2π M (1 + C (b(m) + 1) (2-5δ)/2 ) N (λ(1 + Cλ -3δ+1 ) - 1 4 , b(m)) dm
where

N (µ, b(m)) = b(m) +∞ k=0 [µ -(2k + 1)b(m)] 0 + if b(m) > 0 ,
and

N (µ, b(m)) = µ/2 if b(m) = 0 .
[ρ] 0 + is the Heaviside function:

[ρ] 0 + = 1 , if ρ > 0 0 , if ρ ≤ 0 .
The Theorem remains true if we replace

M by J 2 k=1 F k
, due to the fact that the other parts are bounded by Cλ .

Corollary 2.2 Under the assumptions of Theorem 2.1 and if the function

ω(µ) = M [µ -b(m)] 0 + dm satisfies, ∃ C 1 > 0 s.t. ∀ µ > C 1 , ∀ τ ∈ ]0, 1[ , ω ((1 + τ ) µ) -ω(µ) ≤ C 1 τ ω(µ) , (2.9) then N(λ; -∆ A ) ∼ 1 2π M N (λ - 1 4 , b(m)) dm .
(2.10)

For example this allows us to consider magnetic fields of the following type:

on F k , b(θ, t) = p k ( 1/ cosh(t) )
, and on M j , j > 0 , b(θ, y) = q j (y) , where the p k (s) and the q j (s) are, for large s, polynomial functions of order ≥ 1 . In this case, if d is the largest order of the p k (s) , then

N(λ; -∆ A ) ∼ αλ 1+1/d ,
for some constant α > 0 , depending only on the funnels F k where the order of p k (s) is d .

3 Estimate for Dirichlet operators

The main propositions

In this section, we consider some particular open set Ω of M with smooth boundary. To Ω and -∆ A , we associate the Dirichlet operator -∆ Ω A , and we estimate N(λ; -∆ Ω A ) .

N(λ; -∆

Ω A ) - |Ω| 4π λ ≤ C Ω √ λ ; ∀ λ > 1 .
As Ω is compact, the above estimate is well known. See for example Theorem 29.3.3 in [Hor].

Proposition 3.2 Let j > 0 and Ω an open set of the cusp M j , isometric to S×]a 2 , +∞[ , equipped with the metric ds 2 = y -2 ( L 2 dθ 2 + dy 2 ) ; (a and L are strictly positive constants) .

Then -∆ Ω

A has a compact resolvent and

N(λ; -∆ Ω A ) ∼ |Ω| 4π λ ; as λ → +∞ .
We will prove it in the next subsection.

Proposition 3.3

Let Ω an open set of a funnel F k , isometric to S×]a 2 , +∞[ , equipped with the metric ds 2 = L 2 cosh 2 (t) dθ 2 + dt 2 ; (a and L are strictly positive constants) .

Then -∆ Ω

A has a compact resolvent and for any δ ∈ ] 1 3 , 2 5 [ , there exists a constant C > 0 such that

1 2π Ω (1 - C (b(m) + 1) (2-5δ)/2 ) N (λ(1 -Cλ -3δ+1 ) - 1 4 , b(m)) dm ≤ N(λ, -∆ Ω A ) ≤ 1 2π Ω (1 + C (b(m) + 1) (2-5δ)/2 ) N (λ(1 + Cλ -3δ+1 ) - 1 4 , b(m)) dm
The proof comes easily following the ones in the Poincaré half-plane of [Mo-Tr], using the method of [Col], in the neighbourhood of the boundary at infinity. It corresponds to a context where the partitions of unity were fine, so they can be performed on S×]a 2 , +∞[ , (instead of R×] -∞, 0[ ) .

Proof of Proposition 3.2

For simplicity we change the unit circle S = S 1 into the circle S L , of radius L , so Ω = S L ×]a 2 , +∞[ , ds 2 = y -2 (dx 2 + dy 2 ) , and (3.1)

-∆ Ω A u(z) = y 2 [(D x -A 1 ) 2 u(z) + (D y -A 2 ) 2 u(z)] ; moreover d(z, z ′ ) = arg cosh y 2 + y ′2 + d 2 S L (x, x ′ ) 2yy ′ .
We begin by proving the compactness of the resolvent of -∆ Ω A .

Lemma 3.4 There exists

C 0 > 1 such that Ω (b(z) -C 0 )|u(z)| 2 dm ≤ Ω -∆ Ω A u(z)u(z)dm ; ∀ u ∈ C ∞ 0 (Ω) .
Proof. Let us denote the quadratic form

q Ω A (u) = Ω -∆ Ω A u(z)u(z)dm ∀ u ∈ C ∞ 0 (Ω) . (3.2) Then q Ω A (u) = Ω |(D x -A 1 )u| 2 + (D y -A 2 )u| 2 dxdy ,
and

Ω b(z)|u(z)| 2 dm = Ω [(D x -A 1 )u(z)(D y -A 2 )u(z) -(D y -A 2 )u(z)(D x -A 1 )u(z)]dxdy .
Therefore we get that

Ω b(z)|u(z)| 2 dm ≤ q Ω A (u) .
As b(z) = | b(z)| → +∞ at the infinity, the Lemma comes easily. The Lemma 3.4 and the assumption (2.5) prove that -∆ Ω A has compact resolvent.

Later on, we will need that the assumptions (2.5) and (2.6) ensure that there exists Lemma 3.5 There exists a constant C 0 > 1 such that, for any λ > 1 and for any K ⊂ Ω isometric to I 1 × I 2 , endowed with the metric in (3.1), with

C > 1 such that ∀ z = (x, y) , z ′ = (x ′ , y ′ ) ∈ Ω , b(z)/C ≤ b(z ′ ) ≤ Cb(z) , if |y -y ′ | ≤
I 1 =]x 0 -ǫ 1 , x 0 + ǫ 1 [ , I 2 =]y 0 -ǫ 2 , y 0 + ǫ 2 [ , ǫ 1 ∈ ]C -1 0 , 1[ , ǫ 2 = √ y 0 / b(z 0 ) , (y 0 > C 0 ) ;
the following estimates hold:

[λ(1 - 1 √ y 0 ) -C 0 ] |K| g 4π ≤ N(λ; -∆ K A ) ≤ [λ(1 + 1 √ y 0 ) + C 0 ] |K| g 4π . (3.4)
Proof. If b(z 0 ) > Cλ , then, according to the estimate of Lemma 3.4 with K instead of Ω , N(λ; -∆ K A ) = 0 . So we can assume that b(z 0 ) ≤ Cλ .

We use that the spectrum of -∆ K

A is gauge-invariant, so we can suppose that in K A 2 = 0 and A

1 (x, y) = - y y 0 b(x, ρ) ρ 2 dρ . Then |A 1 (x, y)| ≤ Cǫ 2 b(z 0 ) y 2 0 .
From this estimate, we get that for any ǫ ∈]0, 1[ ,

-(1 -ǫ)∆ K 0 -Cǫ 2 2 b 2 (z 0 ) ǫy 2 0 ≤ -∆ K A ≤ -(1 + ǫ)∆ K 0 + Cǫ 2 2 b 2 (z 0 ) ǫy 2 0 .
We take ǫ = 1/ √ y 0 , to get

-(1 - 1 √ y 0 )∆ K 0 -C b(z 0 ) √ y 0 ≤ -∆ K A ≤ -(1 + 1 √ y 0 )∆ K 0 + C b(z 0 ) √ y 0 .
As b(z 0 ) ≤ Cλ , the Lemma follows easily from the min-max principle and the well-known estimate for N(λ; -∆ K 0 ) . Proof of Proposition 3.2. It follows easily from Lemma 3.5, (for large y ), using the same tricks as in [Mo-Tr].

4 Proof of the main Theorem 2.1

The proof comes easily from the three propositions 3.1 --3.3, following the method developped in [Mo-Tr].

Remark on the case of constant magnetic field

It is not always possible to have a constant magnetic field on M , (for topological reason), but for any (b, β) ∈ R J 1 × R J 2 , there exists a one-form A , such that the corresponding magnetic field dA satisfies

dA = b(z)dm b(z) = b j ∀ z ∈ M j b(z) = β k ∀ z ∈ F k (5.1)

Proposition 3. 1

 1 Let Ω an open set of M 0 with smooth boundary. Then there exists a constant C Ω > 0 s.t.

  1 and y > C . (3.3) This comes from the fact that d(z) is equivalent to ln(y) for y(> 1) large enough, so the assumption (2.6) ensures that |∂ x b(z)| + |∂ y b(z)| ≤ C(|b(z)| + 1).

Theorem 5.1 Assume (2.1) and (5.1).

If J 1 = 0 and J 2 > 0 , then the essential spectrum of -∆ A is

with S(β k ) = ∅ when |β k | ≤ 1/2 and when

If J 1 and J 2 are > 0 , then for any j , 1 ≤ j ≤ J 1 and for any z ∈ M j there exists a unique closed curve through z , C j,z in (M j , g) , not contractible and with zero g-curvature. The following limit exists and is finite:

A .

(5.3)

Remark 5.2 In Theorem 5.1, one can change C j,z into S j,z , the unique closed curve through z , not contractible and with minimal g-length. S j,z is not smooth at z, S j,z is part of two geodesics through z , so there is an out-going tangent and an incoming tangent at z . It is easy to see that C j,z ∩ S j,z = {z} , so by Stokes formula

The orientation in both cases C j,z and S j,z , is chosen such that, if u z , v z ∈ T z M j , g z (u z , v z ) = 0 , dm(u z , v z ) > 0 , and u z is tangent to the curve (in the positive direction), then v z points to boundary at infinity; (for S j,z , one can take as u z the out-going tangent, or the incoming tangent).

Proof of Theorem 5.1. It is clear that

(5.5) so the proof will result on the two lemmas below.

Lemma 5.3

)dθ , (for some constant ξ) .

So we can assume that

We change the density dm = τ k cosh(t)dθdt for dθdt , using the unitary operator Uf = (τ k cosh(t)) 1/2 f , so

We remind that λ ∈ sp ess (-∆ F k A ) iff there exists a sequence (u j

for the Dirichlet condition on L 2 (I; dt) ;

Writing that

we get easily that sp ess (P

where (ℓ(j)) j denotes any decreasing sequence of negative integers. Now we use again the formula

Assuming ℓξ < 0 , we set ρ = |ℓ -ξ|/τ k and we introduce the new variable y = 2ρe -t . We get that P ℓ is unitarily equivalent to P ρ defined as a Dirichlet type operator in L 2 (]0, 2ρe -α 2 k [; dy) , (zero boundary condition is only required on the right boundary):

, and the operator

We remind that the eigenfunctions associated to the eigenvalues in S(β k ) of P ∞ are exponentially decreasing, so if λ 0 (ρ) ≤ . . . ≤ λ j (ρ) ≤ λ j+1 (ρ) . . . are the eigenvalues of P ρ then for any j ,

Proof. Use the coordinate t = ln y instead of y , so M j = S×]α 2 j , +∞[ and ds 2 j = L 2 j e -2t dθ 2 + dt 2 ; (α j = e a j ) .

Then -∆

) and dm = L j e -t dθdt . As in Lemma 5.3, we have

)dθ , (for some constant ξ) .

So we can also assume that A = A .

We replace the density dm by dθdt , using the unitary operator Uf = L j e -t/2 f , so

Then we get also that sp(-∆


Sujuan Xie

Liang Guo
email: guol@esc-larochelle.fr

Lawrence King

Political Connection and Financial Performance: Evidence from Chinese Small-and-Medium Enterprises

Introduction

Since 1978, China gradually adopted a series of reform policies aiming to transform its former central planned economy to a socialist market economy. For the past three decades, the economic reform has brought China a flourishing private sector: it has grown at an annual rate of twenty percent, far above the economy's eight percent average growth for the same period [START_REF] Tsai | Back-Alley Banking: Private Entreprenerus in China[END_REF]. Moreover, the non-state sector in China has accounted for two-thirds of total productivity and GDP (Welborn, 2003). The high-speed development of the private sector has been achieved primarily by decentralization of decision making power from the government to enterprises [START_REF] Mcmillan | The central role of entrepreneurs in transition economies[END_REF][START_REF] Siu | Marketing in Chinese Small and Medium Enterprises (SMEs): The State of the Art in a Chinese Socialist Economy[END_REF]. This decentralization process led to transformation of those large state-owned enterprises and spur of private small-and-medium enterprise (SMEs), such as the flourishing of township-and-village enterprises (TVEs). While most attention has been paid on how the transformation of large SOEs accelerated the development of private sectors, the creation and development of SMEs has had a significant influence on the development of the private economy, a fact that has been noted recently by sociologists.

The rise of those small businesses raises several questions about the way in which China's SMEs has developed. One of these is whether there is a Chinese style of the development of SMEs which differs from that in capitalist economies. According to resource-based theory, in capitalist economies the basis for a firm's competitive advantage lies primarily in its application of the valuable resources that are at the firm's disposal (Rumelt, 1984, p557-558;Wernerfelt, 1995, p172). However, developing in a transitional economy where the market is not the dominant mechanism for the allocation of resources, China's SMEs have developed different strategies to gain better financial performance. This paper, therefore, tries to explain both theoretically and empirically what is the China's style of development of SMEs, particularly focusing on the political connectivity and the financial performance of SMEs. For the rest sections of this paper we firstly deal with the theoretical debate on the development of firms in China's traditional economy.. Secondly, the methodology of this paper will be discussed. A multi-level modelling is used to describe the political connectivity and the financial performance of China's publically listed SMEs. Finally, research results will be presented and further discussed.

Theoretical Debate

There are two major perspectives explaining the practice and performance of China's domestic enterprises: new institutional sociology and local corporatism. Each gives special emphasis to a distinct reason for the development of the Chinese enterprises.

The first perspective is the new institutional sociology, forcefully argued by Victor Nee [START_REF] Nee | A theory of market transition: From redistribution to markets in state socialism[END_REF][START_REF] Nee | Peasant entrepreneurs in China's "second economy": An institutional analysis[END_REF][START_REF] Nee | Organizational Dynamics of Market Transition: Hybrid Forms, Property Rights, and Mixed Economy in China[END_REF][START_REF] Nee | The emergence of a market society: Changing mechanisms of stratification in China[END_REF][START_REF] Nee | The role of the state in making a market economy[END_REF]Nee andCao 1999, 2002;[START_REF] Nee | Market transition and societal transformation in reforming state socialism[END_REF]Nee andSu 1996, 1998). [START_REF] Nee | A theory of market transition: From redistribution to markets in state socialism[END_REF] proposes the market transition theory to account for the China's rapid growth. The basic argument of this theory is that market mechanisms began to develop and replace the redistributive mechanisms to direct the economic activity. Market mechanisms and redistributive mechanisms are two different economic systems. Under the market economy, the resources are allocated by market and economic actors, for example entrepreneurs and direct producers, have their own incentives to enlarge their market shares.

By contrast, under the redistributive economy all of the resources are allocated by the central government and the economic activities are also directed by the central planning. In the process of transition the increasing market force inevitably decrease the state regulation power.

Therefore, the market -rather than the party state apparatus -increasingly generates market-based power, opportunity, and incentives [START_REF] Bian | Explaining Chinese Emerging Private Economy: Sociological Perspectives[END_REF].

The second approach to examining China's transitional process is the local corporatist approach, articulated initially by Andrew Walder (1995b[START_REF] Walder | China's transitional economy[END_REF][START_REF] Walder | Elite opportunity in transitional economies[END_REF]. He emphasizes the continuity of political institutions and suggests it is the political processes -such as the change within different levels of government jurisdictions -that determine how China's private economy developed (Walder 1995b[START_REF] Walder | Elite opportunity in transitional economies[END_REF]. Small firms, particularly those governed by governments at the lower level of the state bureaucratic hierarchy, cannot compete with large SOEs that are usually protected by state government in obtaining factor resources.

Therefore, they need a third party's help in order to keep stability in the market.

The major arguments of each perspective are summarized in Table 1.

Hypotheses

We will follow the local corporatism theory to access the influence between political connectivity and firm's financial performance.

Main Effect

The local corporatist perspective suggests the important role of political connection in enterprises' financial performance. Walder (1996a) argues that the formation of markets can take various forms and therefore a firm's success is not necessarily related to the increasing market force. In the case of China, it is the state that determines the paths of the development of enterprises (Walder 1995b[START_REF] Walder | China's transitional economy[END_REF]. Therefore:

Hypothesis 1: Firms with more political connectivity have better financial performance.

Local corporatism focuses on the relation of firms with local governments. For the local corporatist perspective, the lower level government jurisdictions have the strongest incentives to improve the firms' financial performance. Based on these arguments, we assume that the political connectivity at lower level government jurisdictions is more beneficial for firms, especially for SMEs. Thus:

Hypothesis 2: The political connectivity at the lower level of government jurisdictions improves firm's financial performance.

Moderating Effects [START_REF] Diprete | Multilevel Models : methods and substance[END_REF] and Xie (2008) argued that micro-level units are located in different and distinguishable social contexts, and that the properties of these social contexts explain the variation in the micro-level coefficients. The influence of a firm's political connectivity on its financial performance is a function of industry's characteristics, moderated by the industrial context in which the firm operates. The level of marketisation varies with industries. In the industries with low levels of marketisation, industries' policies usually are not generated naturally by markets but made by government; firms can easily achieve an advantage through non-market methods, for example, close connections with government. In this sense, political connectivity may help firms win a larger market share, beat competitors and outperform others. Thus, we suppose the effect of political connectivity on financial performance becomes stronger for a firm in a lowly marketised industry (i.e. a highly concentrated industry). Therefore: Although we do not support Nee's market transition theory and neither propose any hypothesis based on it, as a comparison to the political effects we will still explore whether the effects of advertising, research and development and human capital, three widely-used market mechanisms on firm's financial performance in the empirical study.

The Empirical Study

The Sample

The sample firms we have chosen for our research are all the 274 companies listed on the Small-Medium Enterprise board of the Shenzhen Stock Exchange in China. The data were hand-collected from each company's prospectus.

Measures Dependent variables

Inspired by the study of [START_REF] Wong | Politically Connected CEOs, Corporate governance, and Post-IPO performance of China's newly partially privatized firms[END_REF], we employ both stock-and accounting-based measures to evaluate the financial performance of the sample companies. The stock-market-based performance measure is the market returns of each company. We also used one accounting performance measure: the average of return on assets (ROA) (as net income divided by total assets) in the one-, two-year pre-Initial Public Offering (IPO) and the year of IPO.

Independent Variables

There are 11 independent variables. We develop a nominal variable for the level of education attained by the directors and senior managers of the company (i.e. four for Ph.D., three for post-graduate level, two for college level, and one for high-school level or below). The level of political connectivity was measured by two variables. The first one was the percentage of board directors and senior managers are members of the Chinese Communist Party (CCP).

The second one is related to the board directors and senior managers of each company who are current or former officials of the central or local government or officers of the military (see [START_REF] Wong | Politically Connected CEOs, Corporate governance, and Post-IPO performance of China's newly partially privatized firms[END_REF]. We first coded the rank of civil servant or of military officer for each person (i.e. three for senior level position, two for middle level position, one for junior level position, and zero for never worked as civil servant or military officer) and used the average as the independent variable. The information for these variables is obtained from the "Profile of Directors and Senior Managers" section of each company's prospectus.

The following variables are included into our models as control variables: the firm age, firm size (measured by the nature logarithm transformed total assets), the market-to-book ratio, the average of leverage ratios of last three years, and the variable at the industry level, which quantifies the level of industry concentration and is measured by the Hirschman Herfindahl Index (HHI or HIndex) for each industry [START_REF] Wong | Politically Connected CEOs, Corporate governance, and Post-IPO performance of China's newly partially privatized firms[END_REF]. Finally, we used the average advertising expenditure to sales and the average of Research-and-Development (R&D) expenditure to sales ratios of last three years as proxy variables of the traditional methods that firms can implement to achieve strategic advantages.

Models

The multilevel model, which specifies the effect of the social context on individual-level outcomes, has been theoretically analysed and is gradually being employed increasingly in sociological methodology [START_REF] Diprete | Multilevel Models : methods and substance[END_REF]Xie 2008). The multi-level modelling is often seen as an appropriate strategy for analysing data with a hierarchical structure. This is the case in this study, where companies are grouped into industries.

We conducted the analyses in three panels. The estimated models in Panel A are:

For Firm i operating in Industry j in the year of IPO (Year t):

(1) MRI ijt /ROA ijt =β 0ij +β 1ij *Firm Age ij + β 2ij *Firm Size ijt-1 + β 3ij *Leverage ijt-1 +β 4ij *Market-to-Book Value ijt + β 5ij *(Advertising t

Hypotheses Testing

Table 3 reports the results of multi-level regression for the ROA. Panel A focuses on the main effects of market mechanisms and political connectivity. Model 1 includes control variables. Firm age has a slightly negative impact on ROA (-0.0001, p<0.01), which means when firms get older, their profitability decreases. The impact of leverage on a firm is significantly negative (-0.232, p<0.01), which refers to the amount of debts a firm has; the more debts, the less the firm is able to obtain a better financial performance.

The model 2, 3 and 4 examine how market mechanism influences the firm financial performance. As stated in the previous section, we choose the three most commonly-used market mechanisms -the advertising investment, the R&D expenditures, and the education level of board directors and senior managers. Of all the variables, advertising investment has the largest influence on a firm's ROA (0.016, p<0.05), which means the more money a firm spends on the advertising, the more profitable the firm is. The indicator of the education level shows that firms with board members who have higher educational degrees are likely to perform well (0.009, p<0.05). For the R&D expenditure, it has slightly positive effects on a firm's profitability (0.158, p<0.1).

The model 5, 6, 7, 8 and 9 in table eight present the effects of political connectivity on the ROA. In model 5, percentage of the CCP membership slightly damages ROA (-0.026, p<0.05), which shows that the more presence of members of Communist party on the board, the less likely a firm can get a better ROA. In model 6, the percentage of civil servants has marginally positive effect on ROA (0.017, p<0.10).

In Model 8, the percentage of military officers has no significant impact on ROA.

Basically, Hypothesis 1 is rejected. However, Hypothesis 2 is supported by Model 7.

The negative coefficient -0.011 (p<0.05) suggests that the links with lower levels of government improves firm's profitability.

Panel B addresses the moderating effect of industry concentration or industry marketization. In highly concentrated industries, advertising expenditure marginally decrease (-0.085, p<0.10) but R&D expenditure strongly improves a firm's ROA (2.083, p<0.05). The interactive effects between industry concentration and percentages of the CCP membership and of civil servants are significantly negative (-0.174, p<0.05; -0.218, p<0.05) and that between industry concentration and percentage of military officials, rejecting Hypothesis 3. The interactive effect between industry concentration and the rank of civil servants is significantly negative (-0.102, p<0.05), in support of Hypothesis 4. -946.002 -946.163 -939.163 -942.94 -941.043 -932.113 -935.142 -934.45 **: p<0.01 (very significant), *:p<0.05 (significant), +:p<0.1(marginally significant)

Table 4 summarizes the results of regressions with stock market return as dependent variables.

Panel A focuses on the main effects of market mechanisms and political connectivity. Model 1 includes control variables. The firm age has marginally positive impact on the market return (0.53, p<0.10). The firm size and the market-to-book value have strong influence on the market return (5.877, p<0.05; 8.906, p<0.01). In model 1 to 3, all the three market mechanism variables strongly decrease a firm's stock market return (advertising expenditure, -69.545, p<0.05; R&D expenditure, -275.72, p<0.05; education, -13.019, p<0.05). In model 5, percentage of the CCP membership has no significant effect on the market return. In model 6 and 8, the percentages of civil servants and of military officers has marginally positive effect on the stock market performance (25.472, p<0.10; 111.122, p<0.10), marginally supporting Hypothesis 1. Hypothesis 2 is rejected in Model 7, as the positive coefficient 20.994 (p<0.05) suggests that the links with the higher level of governments improves firm's stock market performance.

Panel B addresses the moderating effect of industry concentration or industry marketization. However, none of the interaction effects are significant. 1992). In this sense, SMEs, due to their fewer opportunities to get factor resources, need to depend on other mechanisms to gain those resources. One of these mechanisms is constructing or maintaining the connection to the government officials, particularly those working at lower government jurisdictions. The decentralization of control rights to the local governments enables them to manage the allocation of resources, which are only controlled by local government officials. This kind of privilege gives local government officials a "resources advantage" [START_REF] Pfeffer | The external control of organizations: a resource dependence perspective[END_REF]. Therefore, the immoral connections, such as patron-client ties become a major method to allocate resources to the SMEs If the effects of the political power on the firms' ROA can be viewed as the political influence on the companies' actual running, the effects of political power on the firm's market return, however, reflect the public perception of the effect of the political connectivity. We might describe the latter as the impact of the legacy of socialist ideology on the economic confidence. The market return is strongly influenced by the investor's expectation for the listed firms. Or we can say that it is this kind of expectation that directs investors' choices. What is the most important consideration here is to find which institutions affect investors' expectations. This brings us to the nature of economic transition. According to Nee (2005), China's economic transition is promoted by the bottom-up force. The interaction between the informal rules and formal rules is important to understand the transition procedure. The formal rules followed the informal rules after the failure of the reform via the formal rules changes [START_REF] Nee | The new institutionalisms in economics and sociology[END_REF]. However, because the rise of informal rules are institutionalized ex post, rather than legitimized by the government before the reform, the public is confused concerning the concepts like "market economy" or the "capitalist economy." Further, although there is a consensus amongst scholars that China is an increasingly capitalist Dimaggio (2002) suggests that due to the uncertainty and the risk, the choices of the public are irrational. This explanation can be applied here. The uncertainty facing the investors led them to dependence on the stereotype that firms with political connections usually have more advantages. In addition, the information vacuum is often deemed as a major problem for the development of China's economy (See [START_REF] Huang | Information, bureaucracy, and economic reforms in China and the Soviet Union[END_REF]. Especially for the public, correct information of the firm's practices and its financial performance is almost impossible to obtain. The uncertainty and risks further make the public depend on the stereotype about the political connection for their investments.

Based on the above analysis, we can conclude that for the listed SMEs, market mechanisms are actually increasing and have positive effects on the firms' performance. However, because the SMEs, unlike large companies who can easily obtain useful resources, still need the political connections to the local governments which control several important resources such as license and contracting opportunities. The majority of the public lacks economic confidence in the capitalist economy due to the state's ambiguous attitudes to the development of capitalism in China. Therefore, the investors still respond to the uncertainty with the stereotype on the political power over the economic activities.

Moderating Effects of the Industry Concentration

The regression shows significant effects of industrial concentration. For the ROA, percentages of party memberships and civil servants continue exerting negative effects, while the marketing strategy of R&D have positive effects on a firm's ROA.

This might indicate that even at less marketized industry, where perfectly competitive market are barely existent, the role of political power are gradually replaced by the rising market force. This kind of institutional change enforces firm employ market methods for a better performance at their daily operation.

On the market mechanism, only the R&D investment has a positive role on a firm's financial performance; while the advertising investment failed to show a beneficial role and the human capital has no significant effects. This can be explained by the industrial concentration in China's market. A variety of empirical studies shows a trend of increasing market concentration in the 1990s (See Chen and Lo 2002).

During this time, large enterprises have successfully restructured themselves and are more competitive in the market (Chen and Lo 2002, p 436). In a highly concentrated market where the market share are largely owned by large enterprises, the strategy of investing in advertising for SMEs to win additional market share might only result in financial losses. Instead, they might expand their market influence via R&D investment to achieve differentiation.

The rank of former or current government officials still plays an important role.

The government officials from the lower government jurisdictions can bring more benefits for those listed SMEs. Compared to a highly marketized industry, SMEs in a low marketized industry have fewer opportunities to gain factor resources and therefore, with the connection to the local government officials, they are better able to keep stable in the marketplace.

Moreover, the industrial level results also support the argument that there is an increasing dependence of firms on the market mechanism for a better financial performance. For the stock market retrun, neither market mechanisms nor political connections have positive effects on a SME's market return. It might be that due to the lack of perfect information, investors often based investment decisions on the industrial concentration -large firms are more likely to gain more market shares and thus obtain a better financial performance.

  The political connectivity at the lower level of government jurisdictions has a stronger effect on firm's financial performance when the firm is in a lowly marketised industry (i.e. a highly concentrated industry).

  economy and it is true that local governments are creating a market-oriented environment for the development of China's capitalist economy (See Qian, Can and Weingast 1998), China's government has never officially claimed to be adopting capitalism. They usually use the expression such as "private economy should supplement the socialist economy of public ownership" (Dane, 2002), or introduce the ideology that developing the capitalist market are beneficial for the achievement of socialist lofty goals. This ambiguous attitude from the governments toward the development of capitalism and a capitalist economy in China caused the uncertainty amongst the public with relation to the capitalist market. Applying Keynes's idea of "animal spirit" to the sociological study on the collective response to uncertainty,

Table 1 :

 1 The Economic Transition: New institutional sociology and local corporatism

			NEW INSTITUTIONAL	LOCAL
			SOCIOLOGY		CORPORATISM
	Analysis		The	market	Local governments as
	variable		institution		corporations
	Perspectives on	Continuous	developing,	Influential, but not
	the	market	gradually replacing the	essential to determine
	mechanism	state to regulate the	the transition trajectory
			economy
	The trajectory	Hybrid	economy	is	Not transitory: the
	of transition	transitory; the reform will	political power adapts
			lead to the full capitalist	to	the	changing
			economy			institutions and thus
						retaining their control
						rights.
	Nature	of	Horizontal networks	Vertical networks
	social network
	Property rights Privatization is the central	Privatization is not
			to improve the enterprise	necessary	as	most
			performance.		current	ownership
						structure still can create
						incentives
	Force behind	Markets			Political power
	change

Table 1 :

 1 Distribution of Sample by Industry

	Sector	# of Companies	Percent
	Aerospace & Defense	2	0.70%
	Alternative Energy	2	0.70%
	Automobiles & Parts	10	3.60%
	Banks	1	0.40%
	Chemicals	37 13.50%
	Construction & Materials	22	8.00%
	Electricity	1	0.40%
	Electronic & Electrical	40 14.50%
	Equipment
	Food & Drug Retailers	2	0.70%
	Food Producers	13	4.70%
	Forestry & Paper	5	1.80%
	General Industrials	5	1.80%
	General Retailers	2	0.70%
	Health Care Equipment &	2	0.70%
	Services
	Household Goods & Home	12	4.40%
	Construction
	Industrial Engineering	25	9.10%
	Industrial Metals & Mining	10	3.60%
	Industrial Transportation	3	1.10%
	Leisure Goods	3	1.10%

Table one reports the distribution of sample. It breaks down the sample by industry sector, which is based on the Standard. & Poor's Global Industry Classification Standard (GICS).

  MRI ijt /ROA ijt =β 0ij +β 1ij *Firm Age ij + β 2ij *Firm Size ijt-1 + β 3ij *Leverage ijt-1 +β 4ij *Market-to-Book Value ijt + β 5ij *(Advertising t-1 or R&D t-1 or

	Tabel 2: Correlation Matrix
		2	3	4	5	6	7	8	9	10	11	12	13	14
	1. ROA	-0.054 -0.149* -0.233** -0.654** 0.101	0.045	0.326** 0.077	0.207** -0.157*	-0.181** -0.188** 0.008
	2. Market Return		0.041	0.109	-0.064	0.423** -0.389** -0.058	-0.148* -0.082	-0.033	0.102	0.124*	0.07
	3. Firm Age			0.108	-0.003	-0.088	-0.052	0.031	0.033	-0.059	0.158*	0.256** 0.262** 0.066
	4. Firm Size 5. Leverage	0.257** -0.011 Education t-1 or Party Percent t-1 or Civil Servant Percent t-1 or Civil 0.055 -0.192** 0.06 -0.139* 0.102 -0.391** -0.048	-0.03 -0.144* 0.028 0.081	0.084 0.099	0.125* 0.089	0.013 -0.119
	6. Market/Book Value 7. Advertising	-0.131* Servant Rank t-1 or Military Officer Percent t-1 ) +β 6ij *SOE*(Advertising t-1 0.102 -0.027 0.091 -0.017 0.236** 0.155*	-0.190** -0.02 0.009 -0.077	-0.051 -0.053	-0.041 -0.147*
	8. R&D 9. H Index	-0.105 or R&D t-1 or Education t-1 or Party Percent t-1 or Civil Servant Percent t-1 0.277** -0.118 0.098 0.004	-0.128* 0	-0.146* 0.033	0.049 0.023
	10. Education 11. Party%	or Civil Servant Rank t-1 or Military Officer Percent t-1 )+ε ij			-0.077	-0.04 0.391** 0.400** 0.119 -0.08 0.033
	12. Civil Servant %												0.929** 0.127*
	13. Civil Servant													0.140*
	Rank 4.4 Analyses 14. Military %
	* Correlation is significant at the 0.05 level (2-tailed). Descriptive Analyses ** Correlation is significant at the 0.01 level (2-tailed).

-1 or R&D t-1 or Education t-1 or Party Percent t-1 or Civil Servant Percent t-1 or Civil Servant Rank t-1 or Military Officer Percent t-1 ) +ε ij Panel B focuses on the moderating effect of SOE, thus:

(2) Zero-order correlations are shown in Table

2

. The ROA is significantly correlated to the firm age (-0.149, p<0.05), firm size (-0.233, p<0.01), leverage (-0.0654, p<0.01), R&D expenditure (0.326, p<0.01), education level (0.207, p<0.01), percentage of the Party (-0.157, p<0.05), percentage of civil servant(-0.181, p<0.01), and the rank of former or current civil servant (-0.188, p<0.01). Market return index is significantly correlated to market/book value (0.423, p<0.01), advertising expenditure (-0.389, p<0.01), H Index (-0.148, p<0.05), and the rank of former or current civil servant (0.124, p<0.05). As the following multilevel analyses show, the effects of political connectivity and market mechanisms on financial performance are conditional on the environment a firm is embedded in.

Table 3 :

 3 Results of regression with ROA as dependant variable

	Panel A: Main Effect
	Dep V:ROA	Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
	Intercept	0.293**	0.292**	0.276**	0.256**	0.293**	0.294**	0.291**	0.294**
		0.035	0.035	0.037	0.038	0.035	0.035	0.035	0.035
	Firm Age	-0.001** -0.001** -0.001** -0.001	-0.001** -0.001** -0.001** -0.001**
		0.00001	0.00001	0.00001	0.00001	0.00001	0.00001	0.00001	0.00001
	Firm Size	-0.002	-0.002	-0.002	-0.002	-0.002	-0.002	-0.002	-0.002
		0.002	0.002	0.002	0.002	0.002	0.002	0.002	0.002
	Leverage	-0.232** -0.236** -0.221** -0.226** -0.233** -0.23**	-0.23**	-0.235**
		0.018	0.018	0.019	0.018	0.018	0.018	0.018	0.018
	Market/Book	-0.0009	-0.0009	-0.0009	-0.0009	-0.001	-0.001	-0.001	-0.001
		0.001	0.001	0.001	0.001	0.001	0.001	0.001	0.001
	Advertising		0.016*
			0.007
	R&D			0.158+
				0.097
	EducationLevel				0.009*
					0.004
	Party%					-0.026*
						0.01
	Civil Servant %						-0.017+
							0.011
	Civil Servant							-0.011*
	Rank
								0.006
	Military %								-0.062
									0.053
	2LL	-941.905 -943.24	-940.04	-938.46	-938.74	-935.255 -936.184 -934.175

Table 4 :

 4 Regression Results with Stock Market Return as Dependent Variable.ROA illustrates the historical records of a firm's actual financial performance. our findings indicate that market mechanisms, instead of political connectivity, are actually the factors that promote the firms' ROA. Therefore, these findings fail to support the perspectives of the local corporatism on the effects of the presence of the party members, civil servants and the military officials. In spit of this, the perspective of the local corporatism on the role of the connection to the local government officials is supported. Compared to the higher civil servant rank, the lower civil servant rank is

		Panel A: Main Effects
	DEP V:MR	MODEL 1 MODEL 2 MODEL 3 MODEL 4 MODEL 5 MODEL 6 MODEL 7 MODEL
									8
	Intercept	-61.221	-61.522+	-31.52	-13.119	-64.782	-66.657+	-61.729	-66.9+
		54.415	50.352	56.536	59.271	54.68	54.466	54.243	54.534
	Firm Age	0.53+	0.364	0.535+	0.492+	0.512+	0.379	0.317	0.511+

Discussion

The Market mechanism for the firm and the Political Connectivity for Investors

The results of regression analysis show an apparent contradiction: while for the firm's ROA, political connection exerts negative influences and market mechanisms such as the R&D investment help the firm get a better financial performance; for the firm's