Informal institutions rule: institutional arrangements and economic performance

Institutions are widely believed to be important for economic development. This paper attempts to contribute to our understanding of how institutions matter by examining the effect of formal and informal institutional arrangements on economic progress. Formal institutions represent government defined and enforced constraints while informal institutions capture private constraints. The findings suggest that the presence of informal institutions is a strong determinant of development. In contrast, formal institutions are only successful when embedded in informal constraints, and codifying informal rules can lead to negative unintended consequences. This suggests that institutions cannot be easily transplanted in order to spur economic development.     

Social funds and decentralisation: optimal institutional design

Most of the 60+ developing countries that have established social funds (SFs) are decentralising their governments as well. But the question of how to tailor SFs—originally a highly centralised model—for a decentralising context has received relatively little attention in the literature. We first examine evidence on the ability of SFs to adapt to a decentralised context. We then lay out the implications of decentralisation for SF institutional design step‐by‐step through the project cycle. The topic is doubly important because social funds can increase their effectiveness, and the sustainability of their investments, by reorganising internal processes to take advantage of the political and civic institutions that decentralisation creates. Local government has an informational advantage in local needs and characteristics (time and place), whereas SFs have access to better technology and knowledge of sectoral best practice. The key is to create institutional incentives that best combine these relative advantages. Copyright © 2006 John Wiley & Sons, Ltd.     

Social divisions and rising terrorist violence in Turkey

In the past 18 months, Turkey has not appreciably reduced Kurdish militant groups' terrorist capabilities or addressed the root causes of their grievances. The country has grown less tolerant of Islamic State activity, and friction between Turkey and its NATO allies has impeded intelligence-sharing about terrorist threats. Accordingly, the level of terrorist violence in Turkey appears set to rise in the months ahead, potentially leading to sustained domestic instability and severe damage to the country’s social fabric.     

Canadian multilateral intergovernmental institutions and the limits of institutional innovation

ABSTRACT

In 2003, the premiers of Canada’s ten provinces and three territories established the Council of the Federation (CoF) to strengthen interprovincial cooperation and exercise leadership on national issues. However, the purpose of COF in practice has not been the subject of systematic study. Against the backdrop of its predecessor, the Annual Premiers’ Conference, and the broader institutional and economic forces that contribute more generally to weak institutionalization of Canada’s multilateral intergovernmental forums, this paper considers the functioning of CoF in practice by analysing the nature of the joint positions of premiers expressed in communiqués it has issued to the end of Conservative government rule, 2015. This analysis reveals the spectrum of ‘vertical’ and ‘horizontal’ measures that CoF has undertaken, and the nature of integration of CoF with other multilateral intergovernmental forums. It concludes that CoF is not immune to the underlying forces contributing more generally to the weak institutionalization of multilateral intergovernmental councils.     

Social Democrats and trade unions in Scandinavia: The decline and persistence of institutional relationships

Abstract.  This article examines the institutional arrangements between Social Democratic parties and trade unions in Denmark, Norway and Sweden. First, the authors show how these relations have weakened at a varying pace. Party–union ties are now quite distant in Denmark, but remain relatively close in Norway and, especially, Sweden. Second, the authors explore this variation using a simple model of political exchange. The finding is that the intensity of the relationship is correlated with the resources that each side can derive from the other, which in turn reflects national differences. Yet it is also clear that the degree of change is related to the formative phase of the institutional arrangement itself: the weaker the ties were from the beginning, the more easily they unravel in response to environmental changes.     

Social capital,institutional structures,and democratic performance: A comparative study of German local governments

Abstract. The argument presented is that political culture and institutional structures independently shape government performance. This is consistent with Putnam et al.'s (1983) initial argument that 'endogenous' and 'exogenous' factors are independently at work in shaping institutional performance. It is hypothesized that: (I) social capital within a community positively contributes to government performance, and (2) governmental institutional forms that minimize the number of veto players in the decision making process generate performance superior to those where the number of veto players is large. An analysis of cross–sectional data (mainly drawn from surveys of citizens and elites) on 30 small– to medium–size municipalities in East and West Germany from the year 1995 is undertaken to evaluate these hypotheses. The results from this analysis lead to the following conclusions. Higher social capital within the elite political culture of a community leads to greater citizen satisfaction with local government performance. Local government structures where power is centralized (and thus the number of veto players minimized) generate greater citizen satisfaction with government performance than do those where the distribution of power is more diffuse.     

Uneven institutional configurations and sectoral variation in China's socialist market economy: a comparative study of three pillar industries

By comparing three Chinese pillar industries, automobile, petroleum, and machinery, this paper analyzes how the development of uneven institutional configurations bred sectoral variation in transitional China. In 1994, at the dawn of the Chinese socialist market economy, the State Council issued guidelines for national industrial policy and proposed the enactment of similar growth-promoting policies for all pillar industries. The level of policy enactment and the resulting outcomes, however, vary significantly across the industries. Previous literature on China's rapid industrialization has sought to build a single model encompassing China as a whole, and has emphasized either the state's institutional capacity or China's unique governance mechanisms. This study investigates China's industrialization by taking account of the uneven development of institutional capacity amid macro institutional reforms. Every idea and institution evolved at a different pace in these reforms, and the incremental nature of the reforms further deepened the gaps between sectors. This paper argues that, due to this uneven development, the Chinese state was not strong enough to be considered a developmental state until at least the early 2000s.     

Indexing watchdog accountability powers a framework for assessing the accountability capacity of independent oversight institutions

Independent oversight institutions are critical components of the accountability landscape in modern democracies. This paper presents a framework for assessing the accountability powers of these watchdogs. This watchdog accountability index is an empirical tool to assess the key accountability powers of accountability forums that operate in a democratic constitutional context. The aim is to provide a richer evidence base to assess evolving external accountability arrangements and their effectiveness. Our approach breaks down the concept of watchdog accountability power into three distinct, conceptually coherent dimensions. We apply the accountability index to assess the strength of one of the main watchdog institutions in the EU, the European Court of Auditors in 2017. Data were collected by means of a study of secondary sources and by an expert survey.     

Social and institutional challenges in species and ecosystem conservation: an appraisal of the U.S. Marine Mammal Commission

In the pantheon of U.S. environmental law, only one federal statute—the Marine Mammal Protection Act of 1972—has created an independent oversight agency with explicit authority to conduct appraisals of and make recommendations on all regulatory agency actions under the law. That agency, the U.S. Marine Mammal Commission, is the subject of our analysis. Using a semi-structured survey and participant observation, we assess the commission’s operations under its legislative mandate, using criteria from the literature on policy-oriented professionalism. Our findings indicate a dichotomy between the Commission’s oversight of other agencies’ marine mammal programs and the manner in which it self-evaluates, learns, and evolves on the basis of its experience, with strongly pragmatic approaches to its appraisal of other agencies’ programs, contrasted with weak appraisal of its own operations.     

Gender,actors, and institutions at the local level: Explaining variation in policies to address violence against women and girls

Research on gender equality policy has generally focused on actors and institutions at the national and international levels. This article considers the role of local‐level actors and institutions in explaining different policy responses to violence against women and girls (VAWG). The literature on gender policy trajectories identifies the particular importance of executive actors in influencing “status policies” like VAWG. Quantitative data are analyzed to show how local Police and Crime Commissioners in England and Wales have responded to demands for policy action. The focus is on the interaction between the 41 elected commissioners and the new institutional arrangements for police governance introduced in 2012. The article shows that variation in policy outcomes is related (a) to the gender of executive actors and (b) to the way in which actors interpret elements of the institutional framework, regardless of their own gender.     

Duverger's Laws: Between social and institutional determinism

Abstract. The purpose of this article is to relocate Duverger's Laws within the debate about the effects of electoral systems on the number of parties. Although Duverger's theory has always been seen as the best example of a purely institutionalist approach to the issue, it is possible to argue that this is only true if one overemphasises the meaning of the laws without considering Duverger's justification and explanations for them. However, if one takes into consideration not only the laws, but also Duverger's theories about the effects of electoral systems on the number of parties as a whole, one can argue that his theses do not have a purely institutionalist character and can therefore coexist with theories that try to take into account variables other than electoral rules.     

Globalization and institutional competitiveness

Only dead institutions do not change and only rarely do institutions change by themselves. To maintain performing institutions takes institutional entrepreneurs who are willing to take risks and who possess the capacity and the talent to innovate. A regulation discourse, in contrast to a marketization discourse, would not picture the relationship between globalization and institutional change as a deterministic one. Rather, it would expect that all kinds of actors play a large number of different roles in the course of ongoing institutional change. The result of such complex institutional change, at the level of welfare states, multinational businesses, public administration, and training systems, to mention just a few of the empirical areas covered in this special issue, cannot be fully understood by applying an overly rigid, static, and dualistic approach to modern capitalist economies. The concept of institutional competitiveness, on the contrary, allows for institutional entrepreneurship and institutional hybrids constituting pulsating polities.     

Legitimacy and institutional purpose

ABSTRACT

Institutions undertake a huge variety of constitutive purposes. One of the roles of legitimacy is to protect and promote an institution’s pursuit of its purpose; state legitimacy is generally understood as the right to rule, for example. When considering legitimacy beyond the state, we have to take account of how differences in purposes change legitimacy. I focus in particular on how differences in purpose matter for the stringency of the standards that an institution must meet in order to be legitimate. An important characteristic of an institution’s purpose is its deontic status, i.e. whether it is morally impermissible, merely permissible, or mandatory. Although this matters, it does so in some non-obvious ways; the mere fact of a morally impermissible purpose is not necessarily delegitimating, for example. I also consider the problem of conflicting, multiple, and contested institutional purposes, and the different theoretical roles for institutional purpose. Understanding how differences in purpose matter for an institution’s legitimacy is one part of the broader project of theorizing institutional legitimacy in the many contexts beyond the traditional context of the state.     

Multinationals and institutional competitiveness

This article discusses how institutional competitiveness and multinationals are mutually enriching concepts. Multinationals transfer capital, technology, and knowledge into new settings. They allow subsidiaries access to new markets, new resources, and new processes. Potentially, therefore, institutional competitiveness can be increased by the presence of multinational corporations (MNCs) and their subsidiaries. However, this depends on the type of multinational and the type of institutional context. By differentiating two types of MNC in terms of short‐term and long‐term orientations to investment, and two types of host institutional setting in terms of strength of institutional complementarities and interconnectedness, we develop a typology of four types of interaction between MNCs and institutional settings. We then analyze how each type influences institutional competitiveness. We conclude that these outcomes, while structurally shaped, are still dependent on how actors (individuals, firms, collective organizations, and governments) strategize to develop institutional frameworks in the context of highly competitive global markets.     

Bureaucratic control and information processing: An institutional comparison

Standard models of bureaucratic control argue that politicians vulnerable to asymmetric information rely on third‐party monitoring to expand information supply. This solution to information asymmetry assumes that politicians can process all information that comes their way. However, advocates strategically oversupply information to crowd out rivals, making such a solution counterproductive. Using data on administrative reorganization in Hong Kong, we examine the alternative proposition that bureaucratic control is contingent not only on how information is obtained but also on how it is processed under two different institutional arrangements: one that splits attention across domain‐specific streams and one that concentrates attention in a single sequence. In both cases, bureaucrats refrain from major changes when politicians break from these arrangements. Moreover, bureaucratic action is significantly more likely to respond to changes in attention allocation when politicians process information in multiple streams.     

The Italian budgetary process: Political and institutional constraints

The Italian budgetary process requires constant interaction between executive and legislature. As a result budgetary policy is a reflection of Italian legislative activity in general. Time‐consuming negotiations and compromises are required between a wide range of political interests. Coherent and consistent economic policy‐making is, in these circumstances, difficult to achieve.     

It takes two: how Eurosceptic public opinion and party divisions influence party positions

Do parties respond to voters’ preferences on European integration in elections to the European Parliament (EP)? Following recent research that shows political party responsiveness to Eurosceptic attitudes during EP elections is conditioned by party characteristics, this article seeks to understand how party unity on European integration affects party responsiveness to Euroscepticism. It argues that when Eurosceptic attitudes among voters are high and the parties are divided in their position on European integration, parties will be more responsive to voters and take a more Eurosceptic position. To test the theoretical expectations, the study uses data from the Chapel Hill Expert Survey, the Euromanifestos Project, and European Election Study for 1989–2009 for over 120 parties across 20 European Union member states. The findings have important implications for understanding the nature of democratic representation in the European Union.     

Equilibrium institutions: the federal-proportional trade-off

Durable democracies display a huge variety of combinations of basic institutional formulas. A quantitative logical model shows that while there are multiple equilibrium sets of institutions, each involves some trade-off between the size of the country, the territorial structure of government and the electoral system. Specifically, the larger the country, the more important is federalism in comparison to proportional representation electoral rules for the durability of democratic institutions. The explanatory power of the model is positively tested on all current durable democratic countries. It is also illustrated with a few both fitting and deviant cases. A relevant implication is that the room for manipulation of the choice of institutions is large, but not unlimited, as the choices for a durable democracy are constrained by bounded trade-offs between the values of major institutional variables.