Institutions and economic growth: Recent British experience in an international context

The impact of institutions and political constraints on economic growth is greater than many economists’ models acknowledge. At the same time judgements about growth performance and policy effectiveness need to take account of differential scope for growth through ‘catch‐up’ across countries and over time. British performance, particularly that of the 1980s, seen in the light of the earlier relative economic decline of the UK, is reviewed and comparisons with other European countries are highlighted. This evidence confirms the importance of an approach to growth based on political economy and permits some predictions about relative growth rates in the 1990s.     

The scientific foundation of dynamic stochastic general equilibrium (DSGE) models

DSGE-models provide a coherent framework of analysis. This coherence is brought about by restricting acceptable behavior of agents to dynamic utility maximization and rational expectations. The problem of the DSGE-models (and more generally of macroeconomic models based on rational expectations) is that they assume extraordinary cognitive capabilities of individual agents. In addition, these models need a lot of ad-hoc assumptions to make them fit the data. I argue that we need models that take into account the limited cognitive abilities of agents. One can introduce rationality in such models by assuming “trial and error“ learning. I propose such a model and I analyze its implications.     

French Corporate Governance in the New Global Economy: Mechanisms of Change and Hybridisation within Models of Capitalism

This article analyses the implications of the internationalisation of capital markets, and the influx of Anglo-Saxon institutional investors, for the French model of capitalism. Its central contention is that the global convergence thesis misrepresents contemporary evolutions because it pays insufficient attention to mechanisms of change within models of capitalism. Secondly, framing analysis in terms of hybridisation and fragmentation of national models, rather than convergence, offers greater explanatory purchase over the French model, constitutes a more accurate characterisation, and helps avoid the 'convergence or persistence' impasse within models of capitalism analysis. In exploring French corporate governance, it emphasises the importance of specifying the role of institutional mechanisms as transmission belts of change as a precursor to an assessment of how far shifts in international political economic context bring about changes within French capitalism. Focusing on financial market regulation regime, new legislation in corporate governance and company law, and the market for corporate control as three key potential mechanisms of change, it finds that pre-existing norms and structures endure, mediating the nature of a national political economy's articulation with the international context. Hybridisation and recombination of capitalist institutions drawn from different models provide a far more persuasive account than convergence.     

Supreme Court Justices’ Economic Behaviour: A Multilevel Model Analysis

Supreme Court justices are overlooked, but important, national policy‐making players who render final and consequential decisions in cases on economic conflicts. The research question asks what forces explain the decisional behaviour of Supreme Court justices in economic rights cases between a private and a public party. Theoretically, the decisional behaviour of an individual justice is a function of his or her notion as to what makes ‘good’ law, pursued in a cultural‐collegial setting that is oriented by majoritarian requirements, while constrained by the legal nature of the case being considered. Empirically, all economic decisions made by Norwegian Supreme Court justices in five‐justice panels from 1963 to 2012 are analyzed. Our multilevel model demonstrates that individual, collegial and case‐level forces all contribute to explain the justices’ votes. These results suggest that case‐related dynamics, such as who the plaintiff is or the amount of disagreement between justices, matter, but also that ideology – via appointment mechanisms – matters when a nation's high court justices decide economic cases. Understanding the foundational assumptions and the institutional procedures is vital when transporting judicial behaviour models across polities.     

China's dualist model on technological catching up: a comparative perspective

Abstract

The central question of this paper is whether China can go beyond simple technological transfer and toward innovation in this age of globalization. By adopting an institutionalist perspective, this paper argues that China has developed a dualist model during its economic transitional period in which the foreign sector has been isolated from domestic firms, while the domestic industrial sectors have also failed to develop organic linkages among themselves to facilitate technological learning and generate innovation. This paper discusses four major institutional arrangements that deeply influence China's technological development – the institutional logic of economic reform, the state's industrial policy, the financial system and the industrial structure. It suggests that, owing to these institutional elements, China has neither developed economies of scale, as compared with the South Korean case, nor has it built up a network-type of economy similar to its Taiwanese counterpart in order to generate the mechanisms needed for technological innovation.     

Contracting in local public organizations: the institutional economics perspective

The institutional economics is one of the approaches to explain the utility of contracting of local public service provision. This paper described and critiqued the assumptions underlying institutional economics as it is used in organization theories. It also explains whether and why these assumptions hold in public sector organizations. Finally, it discusses implications from the institutional economics approach for the local agency. Local agencies taking new institutional economics perspective as the basis for its contracting decisions should take transaction risks and information asymmetry into account. Copyright © 2014 John Wiley & Sons, Ltd.     

制度环境、技术效率与区域经济增长差异

将影响技术效率的制度因素纳入效率评价模型,运用构造的DEA三阶段模型测算了1995-2007年中国29个省级行政单位(文中简称省市区或省份)经制度环境变量调整前后的技术效率水平,并对制度环境与地区间技术效率水平及相应的增长差异进行了分析。研究结果表明:第一,中国技术效率整体上呈波动型增长趋势,但与经济周期的波动趋势并不吻合,效率改善并非经济高速增长的主要原因;第二,制度环境影响各地区技术效率水平,技术效率的不同又是造成区域经济增长差异的重要原因。所有制改革、对外开放、财税体制改革等制度变迁均有利于技术效率的改善,而城镇化、科技体制改革对技术效率的影响并不显著;第三,东、中、西部地区纯技术效率呈收敛增长趋势,且西部地区技术效率低下的主要原因在于规模非效率;第四,制度环境变量调整后各地区技术效率差异逐步增加,制度因素在区域经济平衡发展方面具有重要作用。     

Spatial Models of Legislative Effectiveness

Spatial models of policymaking have evolved from the median voter theorem to the inclusion of institutional considerations such as committees, political parties, and various voting and amendment rules. Such models, however, implicitly assume that no policy is better than another at solving public policy problems and that all policy makers are equally effective at advancing proposals. We relax these assumptions, allowing some legislators to be more effective than others at creating high‐quality proposals. The resulting Legislative Effectiveness Model (LEM) offers three main benefits. First, it can better account for policy changes based on the quality of the status quo, changing our understanding of how to overcome gridlock in polarized legislatures. Second, it generalizes canonical models of legislative politics, such as median voter, setter, and pivotal politics models, all of which emerge as special cases within the LEM. Third, the LEM offers significant new empirical predictions, some of which we test (and find support for) within the U.S. Congress.     

Introduction to “charting,tracking, and mapping: new technologies,labor, and surveillance”

Advances in information technologies over the last two decades have offered the promise of revolutionizing workplaces and other settings by expanding the capabilities of individuals working in various professions. Enabled by high-speed computing systems and marked by an intensification of command and control properties, new technologies have expanded, and in some cases intentionally surpassed, the scope of the senses. Technologies such as drones, surveillance cameras, and airport and border security systems promise the seemingly infinite catchment and infinitesimal account of human actions, while computer processing software provides real-time data on large-scale transactional processes occurring in monetary systems and security markets. Charting, tracking, and mapping functions open up new vistas for quantifying social behaviors and detecting misbehaviors, creating new frontiers for criminal justice, the military, and economic activity. The papers in this special issue reveal the processes guiding the rapid transformation and flexible adaptation of institutional structures, economic and financial systems, and threat surveillance and military/police mobilization in the near future.     

Conceptualizing economic security and governance: China confronts globalization

Abstract

With the expansion and deepening of globalization, as well as China's entry into the World Trade Organization, the nexus between economic growth and national security has gained prominence in China since the mid-1990s. How to ensure socio-economic security while maintaining its robust economic growth is now the most serious concern of the Chinese Communist Party (CCP) and the Chinese government. This paper addresses three questions: first, it explores why and how the transformation of economic growth and national security as two separate logics to a single domain evolved conceptually over the past two decades in China; second, what kinds of insecurities are generated by China's robust economic growth coupled with the expansion and deepening of globalization, and in which way and to what extent do they challenge China's government; third, what kinds of mechanisms or policy instruments have been adopted by China's government to address emerging economic insecurities while maintaining robust economic growth. The paper concludes that in the case of China, globalization has posed new challenges to economic security, but given that economic insecurity has its particular salience in individual countries, national institutional adjustment or adaptation becomes increasingly important for each country to govern in the interests of economic security while maintaining economic growth.     

A Preliminary Assessment of Water Institutions in India: An Institutional Design Perspective

Water institutions in India play a crucial role in managing scarce water resources and are central to economic development and poverty alleviation. Designing appropriate institutional mechanisms to allocate scarce water and river flows has been an enormous challenge due to the complex legal, constitutional, and social issues involved. The Indian water sector has been grappling with poor performance and deterioration of public (canal and tank) irrigation systems, high extraction levels of groundwater, and related economic and environmental problems. The objective of this article is to carry out a preliminary assessment of institutional mechanisms available to manage water resources in India. The article surveys various formal and informal institutional arrangements that are used at present and their design features in order to identify those institutions related to superior performance. The analysis indicates that crafting “winning institutions” and the policy frameworks to strengthen them should take into account not only the proven criteria of institutional design but also the changing socioeconomic, political, and cultural factors.     

Determinants of policy change: a cross national analysis

Abstract. This study is an attempt to explain redistributive policy changes in democratic political systems. The two major competing paradigms of such determinants are the 'political environments matter' hypothesis and the economic resources model. This study attempts to show that there is an interdependent or exchange relationship between the choices of the policy makers and the policy takers, and that the periodic elections and the parties are important institutional mechanisms which make the exchange relationship possible. Several propositions about the conditions of policy change emerge from the assumptions about the behaviour of the policy makers and the policy takers. These propositions along with those emerging from the socio-economic and the political factors are tested using data from 21 contemporary democratic regimes beteen 1952–1980. The two dependent variables in the model are expenditures on the direct transfers to the households, and revenue from the direct taxes. Multiple regression analyses are utilized in the statistical tests. These analyses confirm the contention that political exchange plays an important part as a determinant of policy outcomes. It explains as much, if not more, variation in the model as the socio-economic or political environment variables.     

Dynamics of governance,gross capital formation,and growth: Evidence from Brazil,Russia, India,China, and South Africa

This study investigates the impact of governance index and gross fixed capital formation on the economic growth of Brazil, Russia, India, China and South Africa (BRICS) using annual data from 2002 to 2019. This study employs Fixed Effect Model, Driscoll and Kraay standard error with fixed effect, Fully Modified Ordinary Least Square, Dynamic Ordinary Least Square (DOLS) and Panel Dumitrescu Hurlin Causality test. The study has divided the variables into two models where model I includes the impact of governance index (jointly) on economic growth while model II examines the impact of governance index on economic growth individually. The findings demonstrate that the governance index, gross fixed capital formation, population, control of corruption, and governance effectiveness have a positive and significant impact on economic growth, whereas regulatory quality showed a significant and negative impact on economic growth. Furthermore, regarding the Panel test, we notice the presence of unidirectional causality among the constituent variables. Therefore, this study suggests that the government should encourage economic development in the BRICS countries and move away from outdated ideas and poor institutional quality in favor of a new comprehensive reform to achieve excellent governance, population growth control, labor law changes, and corruption control.     

Institutional quality and economic growth: Evidence from South-Asian countries

The current study investigates the relationship between institutional quality and economic growth, focusing on South-Asian countries entailing Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka, from 2002 to 2018. The data are analysed using the dynamic heterogeneous panel (panel autoregressive distributed lag [ARDL] model) approach, specifically the dynamic fixed effect (DFE), mean group (MG), and pooled mean group (PMG). Based on the findings, the three governance indicators, namely corruption control, accountability, and the rule of law, positively and significantly affect economic growth. All the nations have consistent long-run estimates but varied short-run estimates and adjustment speed for the long-term equilibrium. This is due to governance volatility that is evident in all the nations. This article offers both practical and theoretical contributions. This article contributes to the institutional quality and economic growth literature from a theoretical perspective from the South-Asian perspective. From a practical perspective, the study findings are significant for policymakers, particularly those from the countries that demonstrate major fiscal and external imbalance due to war and terrorism, low oil prices and weak trade. Hence, there is a pressing need to address economic growth issues instigated by the policymakers' negligence to ensure appropriate governance and macroeconomic management. Regulators can improve economic growth through national and regional image building by developing a stable economic and political landscape and maintaining macroeconomic stability by improving the institutional quality indicators. There is evidence that institutional quality improvement leads to better economic growth.     

Party systems and the dynamics of government support: Britain and Germany, 1960–1990

Abstract. This paper examines the impact that one feature of a country's institutional context -the party system - has on public support for governing parties in two West European democracies, Germany and Great Britain. Specifically, it argues that models of government popularity need to take politics and institutions into account, and need to do so in a systematic fashion. Using measures of party system fractionalization and public opinion data spanning the period from 1960 to 1990, the paper demonstrates that the effects of economic conditions on government support are mediated by the choices available to citizens to express discontent with the ruling party. The greater the effective number of parties in a system, the stronger the effects of macro-economic performance on support for the government.     

Institutional technology and economic growth

An endogenous model of constitutional changes and economic growth links the temporal decline in private market returns when technology is constant with the returns to rule changes realized in a political market. There is a steady state constitutional setting in which all rule changes have been incorporated that is analytically equivalent to the neoclassical steady state. As in the neoclassical model, private-sector technological progress postpones the steady state. To the extent the original constitutional setting promotes innovation, the evolutionary process toward the steady state is delayed. The model yields a theory of revolution based on forces leading to the adoption of inefficient changes in the constitutional setting.     

Digital Politics in Western Democracies: A Comparative Study

Satisfaction with democracy is driven by the two mechanisms that affect citizens’ income: the market and the state. When people consider that the levels of economic growth and redistribution are sufficient, they are more satisfied with the performance of democratic institutions. This relationship is moderated by personal income: since low-income citizens are more sensitive to changes in personal economic circumstances than high-income citizens, they give more weight to economic perceptions and opinions about redistribution. In this paper evidence is found of this conditional relationship in survey data from 16 established democracies. The results offer a rich characterisation of the state and market-based mechanisms that affect satisfaction with democracy.     

The Institutional Basis of Democratic Accountability

This article offers an institutional approach to accountability in representative democracies. Theorising accountability comprises both settled polities with well-entrenched institutions and unsettled polities with weak or contested institutions, and it is argued that agency theory and formal principal–agent models giving priority to compliance and control usually make assumptions that are unlikely to apply to the latter type of polity. An institutional approach challenges principal–agent assumptions regarding what accountability means and implies, what is involved in demanding, rendering, assessing and responding to accounts and assigning accountability, and how accountability institutions work and change. Accountability is related to fundamental issues in democratic politics and the paper treats distributions of information, normative standards of assessment, authority and power relations as endogenous to democratic politics. The paper also holds that institutions affect actors’ identities and roles through socialisation, internalisation and habitualisation, as well as through external incentives. An aspiration is to take a modest step towards understanding areas of application for competing approaches to democratic accountability.