Appropriate Institutions and Economic Growth - one size fits no-one

Modern-day economics is increasingly biased towards believing that institutions matter for growth, an argument that has been further enforced by the recent economic crisis. There is also a wide consensus on what these growth-promoting institutions should look like, and countries are periodically ranked depending on how their institutional structure compares with the best-practice institutions, mostly in place in the developing world. In this paper, it is argued that ”non-desirable” or “second-best” institutions can be beneficial for fostering investment and thus providing a starting point for sustained growth, and that what matters is the appropriateness of institutions to the economy’s distance to the frontier or current phase of development. Anecdotal evidence from Japan and South-Korea is used as a motivation for studying the subject and a model is presented to describe this phenomenon. In the model, the rigidity or non-rigidity of the institutions is described by entrepreneurial selection. It is assumed that entrepreneurs are the ones taking part in the imitation and innovation of technologies, and that decisions on whether or not their projects are refinanced comes from capitalists. The capitalists in turn have no entrepreneurial skills and act merely as financers of projects. The model has two periods, and two kinds of entrepreneurs: those with high skills and those with low skills. The society’s choice of whether an imitation or innovation – based strategy is chosen is modeled as the trade-off between refinancing a low-skill entrepreneur or investing in the selection of the entrepreneurs resulting in a larger fraction of high-skill entrepreneurs with the ability to innovate but less total investment. Finally, a real-world example from India is presented as an initial attempt to test the theory. The data from the example is not included in this paper. It is noted that the model may be lacking explanatory power due to difficulties in testing the predictions, but that this should not be seen as a reason to disregard the theory – the solution might lie in developing better tools, not better just better theories. The conclusion presented is that institutions do matter. There is no one-size-fits-all-solution when it comes to institutional arrangements in different countries, and developing countries should be given space to develop their own institutional structures that cater to their specific needs.

Traditional institutions and their role in the contemporary coastal resource management in the Pacific Islands

A discussion is presented on the role played by customary marine tenure (CMT) institutions in the regulation of fisheries in the Pacific Ocean Islands. Particular reference is made to the system in operation in Marovo Lagoon, in the Solomon Islands, whereby a number of defined clans control resource use within defined areas of land and sea. It is believed that such systems have considerable capacity for handling and adapting to new circumstances, thereby becoming potentially important tools in the contemporary management of fisheries and of the coastal zone in general.

Representing Europe's Citizens? Electoral Institutions and the Failure of Parliamentary Representation

Scully, Roger, Farrell, David, Representing Europe's Citizens? Electoral Institutions and the Failure of Parliamentary Representation (Oxford: Oxford University Press, 2007), pp.xiii+230 RAE2008

The ‘Us’ in Trust: Who Trusts Northern Ireland’s Political Institutions and Actors?

This article examines levels of interest and trust among the public in relation to Northern Ireland's newly established political institutions and actors, through an analysis of the results of the 2007 Northern Ireland Life and Times Survey (NILT). It is important to reveal the specific groups of people with the highest levels of political disenchantment, particularly in the context of the longer-term stability of the Northern Ireland Assembly and Executive, since the willingness of the electorate to have faith and trust in the workability of these political institutions and in the various political actors in whose custody they lie is considered vital.

The perspectives of ‘disengaged’ students in the 14–19 phase on motivations and barriers to learning within the contexts of institutions and classrooms

In addressing educational disengagement, government policy in England focuses primarily on raising the age of educational participation, promoting vocationalism and directing resources at the population of young people not engaged in any education, employment or training (NEETs). However, ‘disengagement’ is a more fluid and dynamic concept than policy allows for and is visible within a wide range of students, even those deemed to be engaged by their presence in education and educational settings. This paper presents students’ accounts of their educational experiences which suggest that the context of the classroom, student–teacher relationships, peer relationships and pedagogical methods used in classrooms are salient factors in understanding engagement.

Size Matters: The Effect of the Scramble for Africa on Informal Institutions and Development

We argue that the partition of ethnic groups following the Scramble for Africa does not itself matter for development in Africa. It matters only when the partitioned groups are relatively small because small groups lack political representation which may promote ethnic mobilization and foster support for informal (rather than formal) institutions which then may a ect development. Furthermore, the analysis of data from the Afrobarometer shows that the persistence of informal/tribal institutions related to property rights and the rule of law is one of the possible channels through which the size of the partitioned group a ects development.

National institutions and employers’ age management practices in Britain and Germany:‘Path dependence’and option exploration

We pursue a comparative analysis of employers’ age management practices in Britain and Germany, asking how valid ‘convergence’ and ‘Varieties of Capitalism’ theories are. After rejecting the convergence verdict, we proceed to ask how far ‘path dependence’ helps explain inter-country differences. Through 19 interviews with British and German experts, we find that firms have reacted in different ways to promptings from the EU and the two states. Change has been modest and a rhetoric-reality gap exists in firms as they seek to hedge. We point to continuities in German institutional methods of developing new initiatives, and the emerging role of British NGOs in helping firms and the state develop new options. We argue that ‘path dependence’ offers insight into the national comparison, but also advance the idea of national modes of firm optionexploration as an important way of conceptualizing the processes involved.

Shiva's dance: Crisis, local institutions and private firms

The uneven spatial distribution of start-ups and their respective survival may reflect comparative advantages resulting from the local institutional background. For the first time, we explore this idea using Data Envelopment Analysis (DEA) to assess the relative efficiency of Portuguese municipalities in this specific context. We depart from the related literature where expenditure is perceived as a desirable input by choosing a measure of fiscal responsibility and infrastructural variables in the first stage. Comparing results for 2006 and 2010, we find that mean performance decreased substantially 1) with the effects of the Global Financial Crisis, 2) as municipal population increases and 3) as financial independence decreases. A second stage is then performed employing a double-bootstrap procedure to evaluate how the regional context outside the control of local authorities (e.g. demographic characteristics and political preferences) impacts on efficiency.

Labor Market Institutions and Gender Differences in Wage Inequality.

In this paper, we present graphical and quantitative evidence on the important role played by changes in labor market institutions on the rise in wage inequality in the United States during the 1980s. We show that the decline in the real value of the minimium wage and in the rate of unionization explains over a third of the rise in inequality among men.