Economic Theory Research Articles

Three Problems of Business Addressed by Stakeholder Theory: Insights from the Institutional Economics of John R. Commons

AbstractStakeholder theory is traditionally motivated by the need to reconceptualize three core problems of business: value creation and trade, the ethics of capitalism, and managerial mindsets. We argue that the need for this reconceptualization arises, in part, from the limitations of mainstream economic theory in grasping the evolving business environment. The original institutional economics of John R. Commons offers an alternative body of economic thought that addresses these limitations by replacing the atomistic individualism of mainstream economics with an ontology grounded in collective action. Drawing on Commons’ insights, we demonstrate how the problem of value creation and trade takes on a new meaning of promoting security of expectations through conflict resolution and the maintenance of order. We further reconstruct the problem of the ethics of capitalism by drawing on Commons’ concept of reasonableness, rooted in evolving community standards of morality. Finally, we trace the problem of managerial mindsets to Commons’ category of industrial goodwill, which suggests that managers can deliberately pursue policies that maximize stakeholders’ collaborative attitudes. We conclude that reconstructing these three problems of business through Commons’ categories reveals the deeper institutional economics content embedded within contemporary stakeholder theory.

Pocketbook Voting in India’s 18th Parliamentary Elections (2024)

The economic theory of voting has long remained a cornerstone in the study of voting behaviour, especially in economically developed democracies. At the heart of it is the assumption that economic contexts shape voting choice and influence electoral outcomes as management of the economy is an important function of governments and that citizens hold elected representatives accountable for the nation’s as well as family’s economic situation. Voters support ruling party candidates when they think the incumbent government has delivered on the economic front—creation of employment opportunities, keeping price of essential goods and services under control, rise in income across social layers and so on. In India, much of the analysis of voting behaviour is focused on shifting allegiance of support across social constituencies—particularly caste and religion. Economic factors of voting choices have received little attention to the extent as if they do not matter. However, analysis of NES (2024) data suggests that economic factors swayed a significant chunk of voters and thus influenced the final electoral outcomes. Anchored in economic theoretical context of voting behaviour, this article particularly examines whether there was pocketbook voting and whether it influenced the electoral outcomes of the 18th general election to Lok Sabha (2024). The findings show that pocketbook voting had significant and substantial effect on political preference.

Paradigm Shift: Will “Productivism” Replace the Washington Consensus?

The article examines the reasons for the emergence and theoretical content of a new political-economic concept “productivism”, which claims to be doctrinal, replacing the neoliberalism and the “Washington Consensus”. The article explains how productivism differs from previous economic theories. It also highlights some internal contradictions within productivism and explains why some people criticize it. Despite the fact that some authors consider productivism as a “New Supply-Side Economics”, we propose to treat this concept not in the context of economic theories, as it does not have the relevant paradigmatic characteristics, but within the family of political-economic doctrines aimed at the direct justification of economic policy. In this case, productivism joins the American collection of “national developmentalism” doctrines, which has a long history and acute demand in the present period.

On the Notion of ‘Factor of Production’ in Economic Theory

On the Notion of ‘Factor of Production’ in Economic Theory

Did Karl Marx party in 1891? The effect of SPD's Erfurt program on Karl Marx's citations

AbstractThe Sozialdemokratische Partei Deutschlands (SPD) is often proposed as a pre‐Soviet popularizer of Marxist economic theories due to its electoral successes in Germany in the decades before World War I. Using the synthetic control method, we examine whether German‐language print references to Karl Marx responded to the SPD's adoption of the Marx‐inspired Erfurt Program of 1891. In doing so, we account for the near‐simultaneous repeal of anti‐socialist censorship laws in Germany. Evidence of a boost to Marx's citations from the Erfurt Program is modest, and cannot be distinguished from the effect of the censorship repeal on all socialist writers. These results suggest that the SPD's role in popularizing Marx was minor compared to later events such as the Russian Revolution of 1917.

Luigi Pasinetti: an appreciation

Abstract This article presents an appreciation of the lifetime contributions of Luigi Pasinetti to economics. In a career spanning 70 years, Pasinetti operated at the frontiers of economic theory and analysis. The article covers his contributions to the economics of growth, distribution, capital, structural change, production and fiscal policy. It also provides an account of his intellectual formation and a checklist of his published works.

The macroeconomic determinants of trade openness in Latin American countries: A panel data analysis

Background Trade openness shows a positive impact on economic growth, supported by economic theory, and export diversification and economic complexity show a positive dynamic in trade openness in the world; however, a specificity is generated in South American countries. Therefore, the objective of the research is to analyse the macroeconomic determinants of trade openness in Latin American countries. Methods The research approach was quantitative and explanatory using panel data methodology from the databases of the World Bank, Harvard University and the Economic Commission for Latin America and the Caribbean for the period 2000-2020. Results The fixed effects panel data model showed that the variables that had a negative impact on trade openness were GDP, the economic complexity index and the logistic performance index, while the variables that had a positive impact were exports of high-tech products (a proxy for innovation), exports, imports, research and development expenditure and interregional trade in goods. Conclusions Therefore, during the analysis period of 2000-2020 in South America, based on the panel data analysis under fixed effects, a total of 8 countries had a negative impact on trade openness, and only the economies of Chile, French Guiana, and Brazil had a positive impact on trade openness; these economies are characterized by their better performance in the economic complexity index, their higher percentage of budget for research and development expenses, and their trade policies oriented towards the industrialization of their value-added products.

The Motivation Factors for Chinese Female Tourists to Participate in ‘Pin’ Themed Afternoon Tea at Luxury Hotels in Macau from the Sharing Economy Perspective and Self-Determination Theory

ABSTRACT The sharing economy has changed the consumption pattern of hospitality services. This study explored a new situation under the sharing economy service – the “Pin” afternoon tea (a form of group purchases) – and determined consumers’ motivations for participation. Qualitative research was conducted in the context of the sharing economy theory and self-determination theory. The results of interviews with 11 Chinese female tourists revealed nine motivation factors in five main dimensions (financial benefits, social benefits, sustainability, enjoyment, and novelty) of “Pin” afternoon teas: cost saving, product scarcity, expanding the circle of friends, social status, environmental consciousness, enjoying the processes, enjoying the foods, enjoying the environment, and experiencing new things. This study contributes to hospitality research by indicating how a niche market (Chinese female tourists) is motivated by a new sharing economy model (the “Pin” afternoon tea). Knowing these motivations may help the hospitality industry formulate appropriate strategies to speed tourism recovery.

Labour productivity, its main indicators, forms of manifestation, and ways to improve

The purposes of the article are to study the content of labour productivity, generalise its main indicators, essence of constant trends manifested in the form of an economic law, disclose its forms of manifestation and ways to increase as well as to attract the attention of subjects of these processes to take regulatory measures. The object of the study is labour in the main link of the economy. The subject are political and economic, social and labour relations between participants of the production process regarding the increase in the labour productivity. Its methodological framework covers provisions explaining the nature of the continuity of labour processes based on the labour productivity. Its main sources are considered using the methods of scientific abstraction, comparison, logical, historical, causal, dialectical methods. Among the scientific results is the conclusion about the essence of the economic law of increasing productivity of social labour, about some properties of the forms of its manifestation, number of directions for accelerating the increase and continuity of the labour process. The scientific and practical significance of the article lies in the possible usefulness for the main link of the economy which corrects its own strategies and development programmes of authorities at various levels during the implementation of economic policy as well as of higher educational institutions of the country where economic theory and labour economics are taught.

Harnessing Artificial Intelligence in Stock Market Investments: A Neomarxist Approach to Alternative Socioeconomic Funding Agendas for National State Revenue Accumulation

In the contemporary economic, sociological and political landscape, the successful integration of Artificial Intelligence (AI) computer programs into the predicted behaviour of stock market value in the financial markets represents a profound burgeoning frontier in economics, with profound implications for both wealth generation and national budget resource allocation. This paper explores the potential sociopolitical economic strategy of using AI-driven stock market prediction predictions to cumulatively accumulate capital funded for by taxpayer sourced representative income. As the baseline return accumulates in the form of investment potential then as a means of revenue accumulation for the state then the burden of the national budget upon its citizens decreases then ceases. This is the theorisation of the establishment of a Marxist economic social superstructure for the funding of social institutions through the powerful potential of artificial intelligence. By leveraging a portion of the national budget on advanced AI technologies, this strategy could dramatically facilitate the financial sustenance of political budgets aimed at social equity and economic justice. Through a critical review of sociological and economic theories, this theoretical research delineates exactly how such an approach could potentially reconfigure the mode of production and contribute to the reformation of a sustainable socialist economy.

For and by the People? Internal Versus External Slum Tourism Entrepreneurs’ Impacts

The controversial impacts of slum tourism have sparked debate and raised questions about its benefits for impoverished communities. The potential positive effects of slum tourism often hinge on “last mile” strategies and the crucial role of local entrepreneurs who manage the visits and interactions in determining the benefits to these areas. Drawing on a blend of Social Entrepreneurship Theory and Economic Development Theory, we explore and compare the contributions of both internal and external slum tourism entrepreneurs. Our findings reveal striking differences in their strategies and orientations. For example, internal entrepreneurs are deeply rooted in the focal slum and prioritize long-term poverty alleviation through the creation of permanent jobs and innovative approaches, whereas external entrepreneurs tend to focus on profit maximization and diversification of their offer outside the slums. However, both internal and external entrepreneurs actively challenge stereotypes, catalyze skills’ development, and channel resources back into the slum communities. This research sheds light on the multifaceted impacts of slum tourism entrepreneurship, providing critical insights for future endeavors in community development and slum tourism studies.

Introduction to the special issue: economic theories and their dueling interpretations

Introduction to the special issue: economic theories and their dueling interpretations

Circular Design Strategies and Economic Sustainability of Construction Projects in Nigeria: The Mediating Role of Organizational Culture

The need to incorporate circularity into construction is a global concern. The current linear consumption of construction materials is economically unsustainable in the midst of growing financial fears. The goal of this study is to probe the effects of circular design strategies (CDS) on the economic sustainability of construction projects (ESCP) based on the mediating role of two dimensions of organizational culture (OC). The paper observed the mediating effects of OC in the association between CDS and ESCP under the premise of the circular economy (CE) theory. The Partial Least Squares-Structural Equation Modeling (PLS-SEM) method was deployed to analyze 359 survey feedbacks obtained from Nigerian construction firms. This paper's key contribution is the confirmation of CDS's significant influence on ESCP and the partial effects of OC on ESCP in the Nigerian construction sector. Additionally, Hierarchical Culture (HC) diminishes the relationship between CDS and ESCP. This demonstrates the necessity for construction companies to create and embrace a more inventive culture—like the Development Culture (DC)—in order to promote circular practices and ultimately support the financial viability of building projects in Nigeria.

Effect of Political Stability on International Tourism in Kenya

Purpose: The aim of the study was to analyze the effect of political stability on international tourism in Kenya. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Political stability is essential for international tourism in Kenya, as stability fosters a sense of safety that attracts foreign visitors. During peaceful periods, Kenya sees growth in tourist arrivals and revenue, while political unrest, such as the post-election violence in 2007-2008, results in sharp declines as safety concerns deter tourists. Tourism in Kenya is highly sensitive to political fluctuations, with even minor instability affecting tourist perceptions. To sustain and grow its tourism sector, Kenya must prioritize political stability through effective governance, peaceful elections, and strong conflict resolution strategies, which will help build a resilient tourism industry. Unique Contribution to Theory, Practice and Policy: Social conflict theory, political economy theory & the institutional theory may be used to anchor future studies on the effect of political stability on international tourism in Kenya. Implementing robust governance practices, such as transparency, accountability, and anti-corruption measures, will enhance the overall tourist experience and foster trust among potential visitors. Formulating policies that promote good governance and strengthen institutions will create a conducive environment for political stability.

Bridging Theory and Practice: Applying Ostrom’s Law to Real-World Resource Management

This article aims to address the practical application of Elinor Ostrom's contributions to resolve issues related to collective action in three key areas: (1) the establishment of institutions, (2) adherence to collective obligations, and (3) mutual monitoring. The article explores the appropriate ways to implement Ostrom's theories across different regions and communities. The discussion begins by outlining Ostrom's significant contribution to economic theory, and this contribution is often referred to as "Ostrom's Law." This principle posits that a resource arrangement that works in practice can work in theory, challenging the prevailing belief that common-pool resources are inherently mismanaged and require either centralized regulation or privatization. The article further examines the potential for developing a practical model for future collective, coordinated actions, which would incorporate both the strengths and limitations of Ostrom's economic theory. Five models for the creation of new collective agreements, as proposed in Ostrom’s works are analyzed, alongside practical examples from countries such as Spain, Philippines, Nepal, and Turkey, where Ostrom's principles have been effectively applied in the management of natural resources. Ostrom's analytical methods and her conclusions regarding collective action theory hold significant value for developing practical tools for direct implementation, particularly in contexts of rapid development, such as those faced by nations, organizations, and smaller collectives. The methodology in 'Bridging Theory and Practice: Applying Ostrom’s Law to Real-World Resource Management' combines qualitative case studies, comparative analysis, and theoretical modeling to explore the practical application of Elinor Ostrom's theories of collective action and management.

Роль банків у процесах тінізації економіки України

Introduction. The relevance of the article is due to the growing role of banking institutions in the process of shadowing the Ukrainian economy, which negatively affects the financial stability of the state. Problem Statement. The shadow economy has been identified as one of the main threats to the economic stability and security of the state. The study of the role of banking institutions in illegal transactions by entities whose purpose is money laundering, using various schemes and methods of financial fraud, is considered from the standpoint of substantiating directions and effective tools for countering shadowing of the economy. The implementation of such measures at the national and corporate level in accordance with international norms will make it possible to strengthen control over banking transactions, increase stability of the banking and financial systems and, ultimately, improve the level of economic security of the country. Purpose. Analysis of the role of banking institutions in the shadow economy, justification of directions and tools for counteracting the participation of banks in the shadow economy. Methods. The methodological basis of the study is the fundamental provisions of economic theory, theories of management and state regulation of the economy, economic and mathematical modeling, the theory of money, finance and credit, scientific achievements on the shadow economy and measures to counteract its manifestations. Results. The study identifies the role of banking institutions and proposes a typology of forms of their participation in the shadow economy, including: legalization of proceeds of crime; use of correspondent accounts; use of fictitious companies and front persons; offshore accounts; lending and deposit operations of banks; securities manipulation; and other financial fraud. The impact of these mechanisms on the economic stability of the state and the banking system is analyzed. A comparative analysis of international experience in combating money laundering is carried out, and effective tools for preventing shadow operations are identified. The trends and factors of shadowing the Ukrainian economy are analyzed. To assess the impact of banking institutions on the spread of the shadow economy, it is proposed to use the Simpson distribution for shadow cash flows and discount rates with the participation of banking institutions. The instruments of counteracting the participation of banks in the processes of shadowing the Ukrainian economy are substantiated. Conclusions. Further research is planned to focus on the impact of modern digital technologies, such as blockchain and cryptocurrencies, on money laundering through banking institutions. A promising area is the development of innovative methods of financial monitoring and identification of suspicious transactions, in particular with the use of artificial intelligence and machine learning. It is also important to study the effectiveness of international cooperation and develop recommendations for improving the legislative framework for combating money laundering through banking institutions.

Analisis Penetapan Harga Jual Beli Makanan pada Sistem Prasmanan Perspektif Prinsip Keadilan Ekonomi Islam

This study examines pricing mechanisms in the buffet system at Wisma Tamu Al Ishlah Restaurant from the perspective of Islamic economic justice principles. This research is crucial given the limited studies that analyze buffet pricing practices from an Islamic economic perspective, particularly in a pesantren (Islamic boarding school) environment. This research adopts a qualitative approach with field research methods, utilizing interviews, observations, and documentation for data collection. The findings indicate that the pricing mechanism at Al Ishlah Restaurant employs a cost-based method, setting prices based on raw material costs, capital, operational expenses, and production services, adjusted according to the types of food selected by customers. Generally, the pricing practices at Wisma Tamu Al Ishlah Restaurant align with Islamic economic justice principles, ensuring that no party is disadvantaged and upholding honesty in transactions. Prices are established through mutual agreement between the restaurant and the customer, ensuring fairness. However, price transparency presents a challenge that could affect consumer perceptions. This research contributes to the development of Islamic economic theory in the culinary business context and provides recommendations to enhance justice in buffet pricing..

Penganggaran dan Pembiayaan Pendidikan yang Efektif dan Efisien

In several ways, the sharia accounting system is different from conventional accounting. However, there are axiomatic technical similarities between the two. By using descriptive qualitative methods, this research aims to provide the author with an understanding of accounting theory and practice in Islamic economics. The research results show that the perspective of accounting science in Islamic economic practice focuses on the use of an accounting system that is in accordance with sharia principles, which prioritizes truth, accuracy and fairness. Surah Al-Baqarah verse 282 emphasizes clear and accurate transaction recording, the use of honest writers, financial accountability, zakat, and transparency and fairness in accounting. The results of this research conclude that there are many ways to see the economic implications of Islam today. First, Islamic economics must adapt to technological changes because they have influenced the way people think and act. Second, the history of Islamic economics has changed in the modern era, and third, Islamic economics is now real and relevant with the development of digital technology. Fourth, the concept of Islamic economics is based on the Koran and Sunnah. Compared to Conventional Accounting: Sharia accounting systems differ from conventional accounting in several key aspects. However, there are axiomatic technical similarities between the two.

CLUB CONVERGENCE OF REAL WAGES IN THE EUROPEAN UNION

This study analyzes real wage convergence within the European Union, scrutinizing it on both regional and national scales. It questions the prevalent notion that open labor movement within the EU naturally leads to wage parity. Using a flexible log t regression and clustering algorithm, the research uncovers a lack of real wage convergence across all EU countries and regions. Instead, it identifies distinct convergence clubs based on real wages, delineated as core versus peripheral countries, and further divided into four regional categories. These findings suggest the existence of significant differences between the core and peripheral countries, hindering wage equalization. Clubs converge to different steady states which yield substantially different average real wages. At the national level, the formation of these wage-based clubs is influenced by the output gap and unemployment benefits, competitiveness and labor productivity, trade integration, and partly by human capital and development level. This study's results are robust and consistent with economic theories concerning real wage determinants. On the regional front, the analysis reveals a complex interplay of multiple variables affecting club formation, with no significant distinctions between certain club pairings. The findings highlight the complex dynamics of wage convergence in the EU, influenced by both economic and non-economic factors. The differences between core and peripheral EU countries are still strong and affect labor market outcomes and real wage convergence.

Veblen’s quadripartite response to the First World War

Prior to the First World War, Thorstein Veblen wrote extensively about economic theory, formulating the tenets of an evolutionary and institutional economics, and criticizing the static and atomistic premises of classical and marginalist economics, particularly the marginalist theory of distribution, which, in his view, wrongly saw wealth as a reward for productive human labor, rather than a result of the unproductive conduct of parasitic elites. In this period, Veblen devoted relatively little attention to the topics of war and peace. As well, he held that social-scientific inquiry is disinterested: a value-neutral search for knowledge of empirical facts and the theories that explain them. However, during the War, Veblen, while retaining the economic principles of his prewar writings, increasingly combined his emphasis on economics with greater attention to political and cultural factors. Simultaneously, he abandoned his prior insistence on value neutrality to become an activist critic of the War and of Germany’s role in fomenting and perpetuating it. This shift led him to develop: (1) a policy-laced theory of war and peace; (2) practical proposals for building an international organization to promote world peace; (3) specific measures to alleviate wartime food and labor shortages in the U.S.; and (4) a sweeping plan for postwar social “reconstruction.” As Veblen developed these four sets of ideas, he continued his opposition to static and atomistic forms of analysis as well as his commitment to an evolutionary and institutional approach, which saw economic life, along with war and peace, turning on a divide between productive human beings and unproductive parasitic elites.