Quality of Institutions for Knowledge-based Economy within New Institutional Economics Framework. Multiple Criteria Decision Analysis for European Countries in the Years 2000–2013

Abstract

(ProQuest: ... denotes formulae omitted.)IntroductionLast decades have brought many significant changes in the structure of the world economy which influence the main determinants of economic processes. First of all, among the new phenomena forming contemporary economy one can point the fundamental technological change leading to forming global knowledge-based economy (see: Pohulak-Zolcdowska, 2016; Kondratiuk-Nierodzinska, 2016; Kowalska, 2016). The different economic results obtained by highly developed countries in utilizing the potential of globalization and technological changes for the last two decades (see: Scarpeta and Tressel, 2004; Balcerzak and Pietrzak, 2016a) have proved that intuitional factors can become obstacle for growth not only in the case of underdeveloped economies (Rodrik, 2007), but quality of institutions significantly influences welfare also in the case of highly developed economies (Balcerzak and Pietrzak, 2016b; Lizinska et al., 2016). This factor creates a scientific demand for international comparative research in the field. In this context, in spite of many methodological dilemmas (see: Buchanan et al., 2014) the institutional economists have taken serious effort to develop the methodology for empirical formalization and quantification of multidimensional qualitative institutional factors, which is necessary for making international comparisons of countries (see: Gwartney et al., 2015; Schwab and Sala-i-Martin, 2015; Janton-Drozdowska and Majewska, 2016; Kordalska and Olczyk, 2016; Doing Business, 2016, Miller et al., 2016). The research presented in this paper should be considered as an input to this empirical effort. The empirical research concerns quality of institutions for knowledge-based economy in the case of the EU countries. It is done for the period 20002013 and is based on the data from Fraser Institute data base for Economic Freedom of the World Report. It is continuation of previous quantitative research of the authors concentrating on international comparative research on quality of institutions in developed countries (Balcerzak, 2009, 2015a; Balcerzak and Pietrzak, 2016c, 2016d; Pietrzak and Balcerzak, 2016a).The main aim of the article is to evaluate the progress obtained by so called new member states of the European Union in the process of regulation reforms and improving quality of their institutions for global knowledge-based economy. For this purpose the research is based on the following thesis: The integration process of Central European countries with the European Union has influenced the acceleration of changes leading to improvement in the quality of their institutional systems in the context of global knowledgebased economy. The research is conducted for the years 2000-2013. As a result, it covers the time of significant formal institutional changes that had to be implemented by Central European countries before the accretion to the EU and the first years after completing formal integration.Additionally, the empirical analysis can be useful in pointing the group of countries that can be considered as leaders and be the source of good practices in the effort to form effective institutional order. This aim is significant from the perspective of creating recommendations for future regulation modifications or policy-making and, for example, forming national strategies that can lead to getting closer to obtaining some aims formed in Europe 2020 strategy (Balcerzak, 2015b).The article completes and improves existing studies by:1. Proposing methodology of measuring quality of institutions for knowledge-based economy that is based on the new institutional economy approach, in that case mostly using transaction cost theory framework. Most of the existing commonly used ratings such as Index of Economic Freedom prepared by Fraser Institute, Doing Business Rapport of the World Bank or Global Competitiveness Rapport include not only institutional factors, but also elements attributed to current economic policy as it is in the case of the first two mentioned ratings, or are concentrated on a specific factor as the last one. …