Institutional Deterioration in Transition Economies: Playing Follow-the-Leader During the Global Financial Crisis?

Economic transition was a systemic change of institutions from those that facilitated a planned, communist economy to those suitable for a market economy. This paper examines the state of this political and economic institutional development in 28 transition economies, focusing on the global financial crisis years of 2007–2012. According to various metrics of institutions, institutional regression has indeed occurred but has been somewhat localized in the countries of the CIS. However, property rights have regressed in some countries in Central/Southern Europe, while financial sector institutions have uniformly degraded across the entire transition space.     

Dignity and development

This paper explores how expanding the notion of informal institutions in the broader institutional framework provides a more complete explanation for development. Specifically, I incorporate McCloskey's notion of ‘dignity and liberty’ as part of the institutional nexus. By doing so, a richer explanation and understanding of the importance of institutions in explaining different economic outcomes is offered. Focusing on bourgeois dignity offers a precise mechanism to explain how institutions matter to support economic growth. In addition, analyzing the changing attitudes toward the bourgeoisie provides a specific example of mechanisms that can lead to institutional change.     

Institutional Infrastructure and Economic Performance: Dynamic Panel Data Evidence

This paper attempts to empirically investigate the link between institutional quality and economic performance in a group of 72 countries during 1980–2001, using dynamic panel data analysis. Five institutional indicators that represent the overall institutional infrastructures of an economy are employed, namely corruption, rule of law, bureaucracy, repudiation of contracts and risk of expropriation. The empirical results demonstrate that institutions’ variables are statistically significant determinants of economic performance. The findings also suggest that the effects of institutional quality vary according to the level of economic development, where institutions are more responsive in the low-income and middle-income countries. In terms of specific effect of institutional development, the results reveal that the higher level of rule of law is most potent in delivering long-run economic benefits.     

HOW THE LEGACY OF FRENCH COLONIZATION HAS SHAPED DIVERGENT LEVELS OF ECONOMIC DEVELOPMENT IN EAST ASIA: A Time‐Series Cross‐National Analysis

Although many countries in East Asia have achieved high growth rates since the middle of the 20th century, former French colonies in the region have struggled to attain comparable levels of economic development. This article is an attempt to explain this variation in development through a cross‐national analysis of economic growth in East Asia for the period from 1970 to 2007. Results suggest that the underperformance of former French colonies is attributable to their inheritance of colonial institutions that have been unfavorable for domestic investment, international trade, and educational attainment. Overall, conclusions lend support for the idea that long‐term economic development should be understood in terms of path dependence, and that sustained economic growth requires a concerted effort to restructure growth‐adverse institutional arrangements.     

State–Society Relations,Institutional Transformation and Economic Development in sub‐Saharan Africa

This paper examines the nature and origins of state–society relations in sub‐Saharan Africa (SSA). It traces the region's predatory state–society relations to slavery and colonialism and the concomitant extractive institutions, which are not conducive to sustainable economic development. Consequently, attempts to achieve sustainable development have been largely futile. The paper proposes a strategy for transforming the region's economic and governance institutions for inclusive and enduring growth and development. This strategy includes the promulgation and enforcement of coherent international codes and guidelines for state–society relations.     

Industrial welfare and the state: nation and city reconsidered

Industrial welfare history presents important challenges to developmental state theories in “late” industrialization. This article expands the debate by examining how nation-states create statutory welfare by addressing institutional variety beyond markets. It is simplistic to argue linear growth of national welfare or of states autonomously regulating markets to achieve risk-mitigation. I contend that welfare institutions emerge from the state’s essential conflict and collaboration with various alternate institutions in cities and regions. Using histories of Europe, India, and Karnataka, I propose a place-based, work-based, and work-place based welfare typology evolving at differential rates. Although economic imperatives exist to expand local risk-pools, it is precisely the alternate institutional diversity that makes late industrial nation-states unable or unwilling to do so. This results in institutionally “thin,” top-down industrial welfare. Ultimately, theories that overly depend on histories of small nations, homogenous nations, or city-states, provide weak tests of the economics of industrial welfare.     

The logic of social policy expansion in a neoliberal context: health insurance reform in Korea after the 1997 economic crisis

In the aftermath of the economic crisis of the late 1990s, the Korean government reformed health insurance system to enhance social equity and solidarity. This article identifies the institutional features and political dynamics involved in completing the reform. The Korean case suggests a model of counter-movement that differs from the historical experiences of both democratic corporatist and liberal welfare states. Two institutional conditions within the politics of crisis contributed to the reform. A legacy of limited state welfare was critical in providing the impetus for reforming health insurance system. More importantly, the crisis maximized the state’s coordination capacity by mobilizing a coherent bureaucracy under the presidential authority, and by limiting interest politics. The Korean experience has important implications for the study of economic crisis and social policy response. The way in which a crisis provides new contexts for welfare and policy making institutions, rather than the institutions themselves, should be the main focus in analyzing policy responses. The focus on the political dynamics of an economic crisis helps us acknowledge the limit of ideological forces of a crisis in facilitating a particular policy response.     

A Less Gendered Access to Land? The Impact of Tanzania's New Wave of Land Reform

Contemporary land reforms in sub‐Saharan Africa tend to be evaluated based on the state‐centric reforms of the past, which disadvantaged women. However, this article argues that the new‐wave of land reforms and their decentralised administration institutions and anti‐discriminatory legal frameworks may be different. Based on field research on the implementation of Tanzania's 1999 Land Acts, it identifies an institutional reconfiguration in which the formal institutions are gradually strengthened and the customary institutions slowly changed. This does not in itself pose a threat to women's access to land and some women, who are otherwise often perceived to be weak, are left better‐off. Nevertheless, access to land becomes socially more uneven.     

Economic Freedom and Economic Growth in South East Europe

Economic freedom, understood as absence of barriers for business entry, business operations and business exit, is a source of economic development. Its impact is indirect: through institutions framework creation and environment that encourages economic development. Primarily, economic freedoms are a reflection of institutional arrangement, which makes business operations and the realization of business ideas easier for entrepreneurs and managers, who are two extremely important groups for economic development. The aim of the paper is to present empirical analysis of interrelation between economic freedom and economic development, expressed through several indicators, such as gross domestic product, income per capita, foreign direct investment per capita.     

A comparative analysis of public sector restructuring in the U.S., Canada, Mexico, and the Caribbean

We examine public sector restructuring in North America and selected Commonwealth Caribbean nations. Although all the countries studied experienced significant restruc-turing in response to public debt pressures, there were major differences across coun-tries in the magnitude, pace, form, and the manner in which restructuring decisions were made. These differences reflect the state of economic development and institu-tional characteristics, e.g., the role of the state and the industrial relations system. In developing countries, international lending institutions played a major role in trans-forming the role of the state. In developed countries, the inherent stability of the eco-nomic systems and institutional pressures led to a gradualist approach to restructuring.     

The uneven patterning of welfare benefits at the twilight of AFDC: assessing the influence of institutions, race, and citizen preferences

Scholars have been slow to test welfare state theories on the extensive subnational variation in the United States during the recent period of retrenchment. We assess institutional politics theories, literature on race and social policy, and public opinion arguments relative to levels of support in states' Aid to Families Dependent Children programs from 1982 until its elimination in 1996. Pooled time-series results demonstrate that the determinants of spending during retrenchment are mostly similar to those driving development and expansion. Pro-spending actors and professionalized state institutions limit benefit curtailment, while jurisdictions with larger African- American populations have lower benefits. Additionally, liberal citizens positively impact support and strengthen the effects of state institutions, but this effect is attenuated in states with larger African-American populations.     

Institutional contexts and mortality: the case of Peru

Increasingly, attention is being given to institutional contexts to explain differential demographic and health outcomes. Regional inequality in terms of economic development, social institutions, and health services leads to regional disparities in health outcomes, especially infant mortality. The author uses linked data from population and economic censuses, government agencies, and health surveys on 24 Peruvian provinces to explore how differential economic development and institutional contexts influence health outcomes. Regional inequities based on rural population, subsistence activity, women's illiteracy, monthly income, gross domestic product, medical care, and health facilities are compared, with a cluster analysis identifying institutional contexts which have internal similarities. These contexts are able to discriminate differences in infant mortality. The analysis demonstrates that infant mortality in Peru varies systematically with social, economic, and medical contexts. Economic development, income and subsistence levels, women's literacy, and the amount of medical care and public health services influence health outcomes. It is clear that understanding such regional inequities can help explain disparities in health outcomes.     

Paradigms for analysis of social institutions: A case for sociological institutionalism

This paper makes a case for sociological institutionalism, particularly its Veblenian variant or connection. This is attempted against a background of the surge of renewed interest in analyzing institutions within modern social science, especially economics and sociology. This is indicated by the emergence of the new institutional economics as the (modified) neoclassical approach to institutions and the revival of economic sociology with its conception of the institutional embeddedness of the economy, respectively. Still, many pertinent differences between economic and sociological institutionalism are overlooked or minimized in the current literature. By exploring such differences, the paper helps span a gap in the literature in which comparative analyses of economic and sociological approaches to institutions are rare.     

Exploring the roles of government involvement and institutional environments in the internationalization of Chinese Internet companies

The interactions between government, institutions, and Internet companies have gained attention in the research on the globalization of China’s Internet. However, few studies have been conducted at the company level, and the knowledge about the roles of government and institutions remains limited. Drawing on institutional theory, this empirical study explored the roles and mechanisms of government involvement and the institutional environment in the internationalization of Chinese Internet companies. The results indicated that government involvement could improve these companies’ degree of international breadth through both state ownership and governmental affiliation. However, the results showed that state ownership had a restraining function on their degree of international depth. In the context of institutional transition in China, these effects could vary according to whether Internet companies operate in good or poor institutional environments. By revealing these relationships, this study contributes to both the theoretical and the empirical understanding of governmental influence and institutional roots in the globalization of China’s Internet.     

Spill‐Up and Spill‐Over of Trust: An Extended Test of Cultural and Institutional Theories of Trust in South Korea1

In comparison to the heated debate over the origins of trust in political institutions, few studies have empirically examined the linkage between trust in political and nonpolitical institutions at the individual level. In this study, we utilize a two‐step methodology to investigate attitudes toward the government in the broader context of attitudes toward related nonpolitical institutions in South Korea. Results from latent class analysis reveal that political trust is an integrated part of a more general set of attitudes toward social and economic institutions. In addition, results from multinomial logistic regression analysis corroborate past studies that found a positive relationship between perceptions of institutional performance and trust in institutions while partially supporting theories advocating the importance of interpersonal trust for institutional trust. This study points to the possibility of interpersonal trust “spilling up” to trust in institutions and the likelihood that trust in one institution “spills over” to trust in other related institutions.     

Configurations of gender inequality: the consequences of ideology and public policy1

This paper gathers a wide range of indicators into distinctive profiles to show how configurations of gender economic inequality are shaped by both welfare state strategies and gender role ideologies. When multiple aspects of gender inequality are assembled together, it becomes evident that all societies exhibit both gender‐egalitarian and inegalitarian features. These tradeoffs can best be understood through the ideological and institutional contexts in which they are embedded. Empirical illustrations are provided for fourteen advanced societies by analysing the major expressions of gender inequality; from women's economic wellbeing and financial autonomy, through labour force participation and continuity of employment, to occupational attainments and economic rewards. The analysis confirms the existence of distinctive profiles of gender inequality and their affinity to normative conceptions of the gender order and ideal types of welfare state institutions.     

The creative economy: invention of a global orthodoxy

This essay considers how policy thinking about culture has been steadily transformed into an overwhelmingly economic subject matter whose central trope is the “creative economy”. The development of current ideas and their background are discussed. Policy ideas first fully developed in the UK have had a global resonance: the illustrative examples of the European Union and the United Nations are discussed. The embedding of creative economy thinking in British cultural institutions such as the BBC and cultural support bodies is illustrated. The impact of current orthodoxy on academic institutions and research is also considered. Countervailing trends are weak. New thinking is now required.     

The Making of National Health Insurance in Britain and Canada: Institutional Analysis and its Limits

Scholars examining the development of health insurance reform programs from an institutionalist perspective have drawn attention to the importance of state structures and administrative capacities in shaping social policy outcomes. Focusing on the introduction of the British National Health Insurance Act of 1911 and the Canadian Hospital Insurance Act of 1957, I suggest that institutionalist analysis can obscure the historical record in three ways. Analysts may ignore the multiple institutional mechanisms that were available to policy makers at the time; they may overlook the contentiousness of policy battles; and they may underestimate the extent to which similar institutions have functioned in very different ways. In the case of Britain, I argue that national health insurance was part of a package of social reforms designed to halt the slide of Britain from a position of preeminence in the world economy. The introduction of Canadian health insurance coincided with an increased role for local and federal states in fostering economic development within the nation. Institutional structures, cultural values, and political power were all resources used within both states to create a consensus behind the new national agenda.     

Explaining Asian economic organization

Conclusion Social theorists are challenged to explain an increasingly complex economic order. It is clear that old theories that posited a developmental sequence from undeveloped to industrialized cannot explain the diverse patterns of industrialization that exist. Certainly, Japan is as developed as Western nations but its patterns of development, its economic norms, and its industrial practices are substantially different from the United States and even its Asian neighbors in Taiwan and South Korea. For example, the fact that Japan has the largest banks in the world, and Taiwan relatively few and weak ones (despite the world's largest per capita foreign reserve holdings), cannot be explained only by recourse to market or state factors, although each play a role. Both countries were literally awash in money in the 1980s, and both countries are clearly capitalist societies where banking institutions are assumed to be critical to economic development, as they have been in the West. But more than market and political economy factors are at work here.In Japan, historically developed institutional factors, dating from before the Meiji Restoration and industrial revolution, created conditions for business group self-financing. Modern-day keiretsu, such as Sumitomo and Mitsui, with their huge banks as centerpieces, trace their origins to pre-industrial merchant houses under family ownership. Inheritance practices in Japan are based on primogeniture, inheritance of the entire fortune by the eldest son. This practice allowed merchant family fortunes to remain intact under the stewardship of the heir. Successful families thus had huge sums of money available to finance the businesses of affiliated branches operating under the badge of the mother house. The descendents of the zaibatsu merchant houses, the keiretsu, continue to rely on their own sources of finance, now institutionalized in banks that serve their credit and other financial needs. To see large banks encapsulated within business networks as only the outcome of distorted market conditions, or as only the result of a powerful business class, misses the institutional origins and overlooks the contemporary institutional underpinnings of the Japanese banking system. Ironically, the weakness of Taiwanese banks can also be traced to a strong family system. Chinese societies practice partible inheritance, that is, division of a family estate equally among all sons. As a result, families divide their fortunes every generation, mitigating against the development of large sums of money. Instead, there is great pressure within families to develop multiple businesses so that at the death of the family head, each son can claim an independent enterprise. Because all Chinese families face the problem of setting up children in business (being an employee is not a desirable status in Taiwan as it is in Japan), a range of informal lending arrangements have arisen within families and among friends to generate investment capital. Strong social norms dictate that one assist financially a kin member or close friend. Banks play a relatively minor role in Taiwan because alternative institutional arrangements, also with preindustrial origins, have obviated the need for banks for some financial functions. Again, market factors are important to understanding the strong curb market and weak formal banking system in Taiwan, and political economy factors, notably the absence of a strong central bank, are also significant. But an institutional explanation integrates these factors into an explanation that begins with the character of the society being explained. We need theories that can account for difference without reducing cases to unique instances, that do not presume the individualistic character of Western social orders, and that are sensitive to an array of ideal as well as material factors operating in different locations. Although political economy, market, and culture theories each have contributions to make, an institutional perspective of the type I outline may be especially suited to the comparative analysis of emerging world economic organization. I think, ironically, that a sensitivity to institutional factors may yield better theories of the West. Rather than assume that the United States and Europe are the exemplars of advanced capitalism, the closest empirical instances of the idealized competitive market, Japan and other Asian nations are suggesting that the West is simply one form of capitalist economic development, an expression no doubt, of the West's own institutional heritage. When we relinquish ethnocentric perspectives we can begin to look at ourselves and our own institutional heritage more clearly.     

Alternative Routes to State Breakdown: Toward an Integrated Model of Territorial Disintegration

A theoretical strategy is proposed to integrate competing models of state breakdown by conceptualizing key concepts in these models at a more abstract level. The demographic model, which asserts that rapid population growth can bring about state breakdown when economic and political institutions are too rigid, is extracted from Goldstone's work. The geopolitical model, which argues that deteriorating geopolitical condition can bring about state breakdown if the state is too weak and the economy too unproductive, is extracted from Skocpol's and Collins's works. The competing models are conceptualized as alternative and interacting routes to state breakdown where changing population pressure and geopolitical condition may generate integrative or disintegrative tendency depending on state power and productivity. A model describing four dimensions of state power—economic, military, political, and administrative—is constructed to incorporate various conceptualizations of the state in the state breakdown literature. Also integrated in the model is a third alternative route suggesting that rapid market development can generate disintegrative tendency if state power is too low. The synthesized model allows us to see that disintegrative/integrative tendency produced by one route may intensify or alleviate that generated by another route.