High-quality Institutions Research Articles

What Explains Geographic Variation in Corporate Investment?

We show that institutions can explain geographic concentration over and above agglomerative forces. This paper uses within country variation in institutional quality, combined with a local identification approach and instrumental variable strategy to explain spatial differences in investment. We use direct (indirect) British rule as proxies for areas with low (high) institutional quality. Institutions can explain 13% of total geographic variation in investment. Moreover, investment is 8-10% lower in areas with low institutional quality. Differences in institutional quality manifest as greater court delays, impeding contractual claims, property rights, and dispute resolution, thereby decreasing investment and increasing project abandonment.

Financial inclusion, income inequality, and institutions in sub-Saharan Africa: Identifying cross-country inequality regimes

This paper applies a finite mixture model to a sample of 28 sub-Saharan African countries to analyse the impact of financial inclusion on income inequality between 2004 and 2016. We hypothesise that the effect of financial inclusion on income inequality differs across groups of countries with similar but unobserved characteristics. We find that the impact of financial inclusion on income inequality varies across two distinct classes of countries. Furthermore, we prove that countries with high institutional quality are more likely to be in the class where financial inclusion reduces income inequality. The results pass a battery of robustness checks. These findings highlight the need for sub-Saharan African countries to develop better democratic environments and institutions if they expect to reap the benefits of financial inclusion.

Nexus between green logistic operations and triple bottom line: evidence from infrastructure-led Chinese outward foreign direct investment in Belt and Road host countries.

The Belt and Road initiative (BRI) mainly relies on the traditional and underdeveloped logistical trade routes including the terrestrial and oceanic Silk Road. The poor logistic infrastructure across the BRI region not only restricts trade potential and economic progress but also creates several social and environmental challenges. Therefore, this study investigates the relationship between green logistic operations, economic, environmental, and social indicators of countries along with the BRI. This study provides three key findings using feasible generalized least squares (FGLS) and system generalized method of moments (Sys-GMM) estimation techniques. First, Chinese outward foreign direct investment significantly improves the quality and quantity of green logistic operations in terms of transport infrastructure, customs services, cost, time, tracking, and reliability of international shipments. Second, a higher quality of transport-related infrastructure, customs clearance efficiency, and competency of logistics services significantly mitigate the level of carbon emissions due to the energy conservation in the supply chain process. Moreover, the application of renewable energy resources significantly improves the quality of logistics operations. These results indicate that higher quality of green logistic operations provides efficient infrastructure and greater information sharing among supply chain partners that increase trade volume, growth opportunities, and environmental sustainability. Third, a higher institutional quality helps to mitigate social concerns through improvement in the efficiency of logistic operations. Although BRI regional estimates show significant variations, the overall results imply that BRI participating countries should integrate with ongoing investment projects to promote the quality and quantity of green logistic infrastructure and ensuring environmental stewardship.

Resource dependence and the causes of local economic growth: An empirical investigation*

Previous research has found that regional resource dependence in Indonesia has been positively associated with income growth, contrary to a ‘resource curse’. We test five potential causal mechanisms for this positive effect: spillovers to manufacturing or to agriculture, higher education provision, improved institutional quality and share of public spending on capital. We follow 390 Indonesian districts from 2006 to 2015, using four alternative resource dependence measures, and instrumenting for their potential endogeneity. We first confirm a positive overall effect of resource dependence on real per capita Gross Regional Domestic Product (GRDP), then test whether district resource dependence positively affects manufacturing, agriculture, education, public capital investment and institutional quality. We finally test whether these factors contribute to GRDP while reducing the remaining effect of resource dependence. We find that resource dependence may aid income in part by raising district institutional quality, which in turn raises GRDP. We also find little support for a ‘contingent curse’ hypothesis that resource dependence only benefits districts that already have higher institutional quality.

Is the Platinum Rule credible? An examination of other-regarding perceptions and attitudes toward unethical behavior

This paper uses data for 53 countries from the World Values Survey in a multilevel regression analysis that seeks to disentangle individual, institutional and other-regarding factors affecting ethical decision-making. The dependent variable is an index of how intolerant people are of unethical conduct. The explanatory variables indicate the perceived trustworthiness and fairness of others. Controls include variables for individual and institutional factors. Findings are that perceptions of trustworthiness in people unknown to them and perceptions of fairness in others correlate with a greater tolerance of unethical behavior, especially in countries with moderate levels of institutional quality. High institutional quality moderates the negative relationship between perceptions and ethical attitudes. The findings confirm the relevance of other-regarding factors and reinforce the importance of quality institutions in supporting ethical decision-making.

Is the Golden Rule Still Golden? Fairness Perceptions and Attitudes Toward Unethical Behavior

This paper uses data for 53 countries from the World Values Survey in a multilevel regression analysis that seeks to disentangle individual, institutional and other-regarding factors affecting ethical decision-making. The dependent variable is an index of how intolerant people are of unethical conduct. The explanatory variables indicate the perceived trustworthiness and fairness of others. Controls include variables for individual and institutional factors. Findings are that perceptions of trustworthiness in people unknown to them and perceptions of fairness in others correlate with a greater tolerance of unethical behavior, especially in countries with moderate levels of institutional quality. High institutional quality moderates the negative relationship between perceptions and ethical attitudes. The findings confirm the relevance of other-regarding factors and reinforce the importance of quality institutions in supporting ethical decision-making.

Growth, institutions and oil dependence: A buffered threshold panel approach

We examine the combined effects of oil dependence and the quality of institutions on economic growth. To do so, we introduce a new buffered threshold panel data model and apply it to 19 oil rent-dependent countries over the period 1996–2017. We show that the relationship between growth and oil-dependence is not linear. More precisely, three categories of oil-dependent countries are identified. Only countries with high-quality institutions are very stable. All the other countries have experienced a transition into a buffer zone and are potentially in a transition between two different regimes. When considering oil dependence as a threshold variable, it appears that the quality of institutions has a positive and significant effect on growth when dependence is either low or high. More interestingly, for countries with intermediate levels of oil-dependence, the quality of the institutions negatively impacts growth. Some of these countries have experienced something of an oil-dependence trap.

Socio-economic Determinants of Environmental Performance in Developing Countries

Preventing the environment is a gigantic challenge for policy-makers as well as for researchers nowadays. The environment is not distressed by only economic activities, but social factors like institutional quality, ethnic diversity, and political freedom also play an important role for environmental performance in developing economies. This paper is an effort explaining the impact of social, political, and economic activities on environment in 116 developing economies for the time span of 1996–2019. For the purpose, panel autoregressive distributed lags technique is employed to determine long-run relation among variables. The findings of the study reveal that GDP growth, financial sector, and energy consumption in these economies are causing to increase the carbon dioxide emissions while institutional quality, ethnic fractionalization, and political freedom have their crucial role to reduce the level of environmental deterioration. The policy-makers may adopt a policy of social interconnection among various ethnic groups, high-quality institutions, political freedom to all, and inclusive financial development for less pollutant environment in these economies.

Natural resources and income inequality in developed countries: synthetic control method evidence

We examine the causal effect of natural resource discoveries on income inequality using the synthetic control method on data from 1947 to 2009. We focus on the natural discoveries in Denmark, Netherlands, and Norway in the 1960–1970s and use top 1% and top 10% income share as the measure of income inequality. Many previous studies have been concerned that natural resources may increase income inequality. To the contrary, our results suggest that natural resources decrease income inequality or have no effect. We attribute this effect to the high institutional quality of countries we examine.

Innovation efficiency and the impact of the institutional quality: a cross-country analysis using the two-stage meta-frontier dynamic network DEA model

Improving the development of science and technology through innovation is the core of a country's economic development. This study employed the two-stage meta-frontier dynamic network DEA model to explore the innovation efficiency from the R&D resources to charges received for the use of intellectual property and high-technology exports in 34 high-income and 23 middle-income countries from 2013 to 2017. We calculated the overall efficiency scores and the technology gap ratios of each country and the scores of input and output variables in the research and development (R&D) stage and marketing stage. The results showed that the average overall efficiency scores of middle-income countries were higher than those of high-income countries from 2013 to 2015, but the five-year total score of high-income countries was higher. The R&D efficiency scores were higher in middle-income countries, while the marketing efficiency scores were higher in high-income countries. In the R&D stage, the scores of all input and output variables were higher in middle-income countries but in the marketing stage, the scores of the output variables in high-income countries were obviously higher. High-quality institution can help improve the innovation efficiency in both high-income and middle-income countries. The efficiency improvements are higher in high-income countries during the R&D stage and higher in middle-income countries during the marketing stage. Therefore, both high-income and middle-income countries should strengthen institutional construction in order to improve the efficiency of innovation. And the researches in middle-income countries should pay more attention to local practical issues and their solutions.

The effect of corporate sustainability performance on leverage adjustments

We examine the impact of corporate sustainability performance (CSP) on the speed at which firms adjust their leverage ratios to the target levels for a large sample of 31 countries from 2002 to 2018. Using two proxies of CSP, we find that firms with superior CSP tend to adjust faster toward their target leverage ratios. In exploring the potential underlying economic mechanisms through which CSP affects leverage adjustments, we find that better CSP helps firms to ease information asymmetry, enhance stakeholder engagement, push up stock prices in the stock market, and improve competitive advantage in the product market. In the cross section, the positive association between CSP and leverage adjustment speed is less pronounced in countries with high-quality institutions. The results remain unchanged in robustness tests. Overall, this paper highlights the important role of CSP in shaping corporate capital structure dynamics and suggests implications for corporate strategic planning on the privately optimal levels of CSP activities.

The Top 100 Most Frequently Cited Publications Concerning Anti-PD-1/PD-L1 Therapy for Lung Cancer: A Bibliometric Analysis.

BackgroundGlobally lung cancer is one of the most common cancers, and is responsible for almost 20% of all cancer care costs. As a potential treatment for lung cancer, anti-PD-1/PD-L1 therapy has become a novel scientific hotspot in recent decades. The present study aims at exploring the status and trends of the top frequently cited publications about the anti-PD-1/PD-L1 therapy for lung cancer via bibliometric analysis.MethodsThe publications concerning anti-PD-1/PD-L1 therapy for lung cancer were searched on the core collection database of Web of Science, setting the time period for retrieval from 1950 to 2019. The top 100 most frequently cited publications were retrieved, and the bibliometric data were mainly accessed through an open online analysis platform and VOSviewer software.ResultsThe cited frequencies about the top 100 cited publications ranged from 218 to 6248. These articles were published in 39 publications, which were mainly ranked in Q1. The top journal in terms of the number of the articles was the New England Journal of Medicine (16 articles). The most frequently nominated author was Brahmer, JR from Sidney Kimmel Comprehensive Cancer Center, while the most contributing institution was Memorial Sloan Kettering Cancer. The United States acted as the pioneer in this new field of research and led plentiful of national and international co-operations. Immunotherapy, nivolumab, cell lung-cancer, safety, and docetaxel appeared more frequently as keywords.DiscussionsTo sum up, high quality journals, influential authors and institutions and research with high quality evidence were apt to attract more attention and possess more public credibility. Moreover, the bibliometric analysis is yielding up its advantage of identifying and analyzing the characteristics and changes in the intellectual structures of a special topic.

The impact of political institutional quality on social cohesion: Evidence from worldwide perspective

Diversity and socioeconomic deprivation have been widely discussed as determinants of social cohesion. These two factors are considered to be a threat to social cohesion. The existing literature identifies the problem, however, the literature suggesting the solution is very limited. The most important determinant which can cure the problems of social cohesion is the better quality of institutions, however, there is hardly any literature on this aspect. The current study has investigated the impact of political institutional quality on social cohesion by employing the fixed‐effect model for estimation. The analysis is conducted for 135 countries, using five‐year average panel data. The results suggest that political institutional quality augments social cohesion, gender equality, and per capita income also augment social cohesion. Ethnic diversity, income inequality, and globalization are a threat to social cohesion. Moreover, the threat to social cohesion is greater when there are low political institutional quality and high ethnic diversity, and income inequality as compared to a situation where there are high political institutional quality and low ethnic diversity, and income inequality. The results further suggest that the harmful effects of ethnic diversity, inequality, and globalization can be, not only overcome by institutional quality but can also be put to use to enhance social cohesion.

The financial costs of terrorism: evidence from Germany

Although the physical and emotional costs of terrorism are widely known, the financial price of terror attacks is still obscure. This paper seeks to examine the heightened uncertainty surrounding terror attacks across the two Germany’s largest and most visited cities (in particular, Berlin and Munich) to shed some light on the reactions of disaggregated German stock market to those unforeseen events. We robustly find that the impact of terrorism varies across sectors. The Berlin attack causes substantial German stock price moves. The airline, hotels, leisure and communication services were harmfully influenced to those events. Nevertheless, the banking and financial services and defense were weakly affected. More importantly, the German stock market has proven a sharp resilience and a prompt and efficient adaptation. The investors’ cognizance of the Germany’s modern greatly diversified, and highly competitive economy and the higher institutional quality have allowed to appropriately dealing with adverse consequences associated with terrorist attacks.

THE IMPACT OF INSTITUTIONAL QUALITY ON MONETARY POLICY RESPONSE FUNCTION: EVIDENCE FROM DEVELOPED AND DEVELOPING ECONOMIES

There is a plethora of empirical evidence available which postulates that the central banks across the world respond asymmetrically to inflation. The response of monetary authorities toward inflation changes, when it reaches a threshold level. After estimating the nonlinear Taylor rule for 51 countries over the period of 1983–2015, including 28 advanced economies and 23 emerging and developing economies, we come to the conclusion that the quality of political institutions has a significant impact on the threshold level of the inflation rate. In contrast to the countries with weak institutional quality, countries with high institutional quality have a very low level of inflation rate where monetary authorities change their behavior. Our finding further reveals that the countries with low corruption, stable governments, efficient bureaucracy and good socio-economic conditions have a very low level of inflation rate. Central banks respond aggressively in these countries when inflation exceeds a threshold level inflation rate. The socio-economic condition index has a greater impact on the inflation threshold level as compared to other sub-indexes of institutional quality. The findings imply that the improvement in institutional quality enables the central banks to keep inflation at a low level.

The dual effect of foreign competition on emerging market firms' internationalization

PurposeThe authors develop a theoretical framework of how foreign competition in a firm's home country jointly interacts with other environmental factors to influence the internationalization pace. This study moves beyond the debate on whether foreign competition promotes or inhibits the internationalization pace by unpacking the nature of pace across strategic and operational dimensions. By differentiating the internationalization paces of market scope and international commitment, the study results show that foreign competition has a positive effect on the former and a negative effect on the latter. This indicates that the determinants of different paces are conditional upon the different knowledge types among foreign competitors.Design/methodology/approachUsing a panel data set of Chinese construction corporations over the period from 2009 to 2015, the authors extend previous research on the effect of home country environment on internationalization behavior in an emerging economy by examining the effects of the interplay between foreign competition in home country and industrial contexts. The authors also explore the moderating effect of subnational institutions on the relationship between foreign competition and internationalization pace. They use a Poisson model and a GEE model to examine the main effects and moderating effects involved.FindingsThe results indicate that industry dynamism strengthens the positive effect of foreign competition and the pace of market scope, while industry munificence weakens the negative effect of foreign competition and the pace of international commitment. The authors’ findings support the coexistence of “pushing” and “pulling” effects of environmental factors from a firm's home country. The authors extend the argument of “institutional escapism” by focusing on subnational institutions. They show that firms located in a region with a low level of marketization are more likely to respond by accelerating the pace of their international expansion to escape from their home country.Originality/valueThe authors’ findings have implications for practitioners and policymakers working with emerging market firms (EMFs). The authors suggest that local governments should consider building high-quality institutions that can reduce the possibility of investment opportunities escaping EMFs. The authors’ findings indicate that international knowledge from foreign competitors may also assist EMFs in understanding more about the cultural environment before entering host countries, although it cannot help them to resolve cultural uncertainty when operating in host countries. Hence, managers should carefully evaluate their competitiveness before they decide to engage in global competition at an accelerated rate.

A one-man show: Journalist Reuven Pedatzur and the Arrow missile project 1994–2012

This article seeks to examine whether, in an age where anyone ostensibly can become a journalist without the backing of any professional and responsible system, a single journalist can bring an important topic, related to a central security issue in a given society, to the attention of the media and of decision-makers. To this end, this study compared the salience and framing of coverage of the Arrow missile project in the Israeli press and among Israeli journalists to the coverage of two other complex topics – the Dolphin submarine project and the Merkava tank project. Two Israeli newspapers were examined: Ha’aretz, which appeals mainly to intellectual readers, and the mass- circulation Yedioth Aharonoth. The findings show that the Arrow project received much more salient coverage than the other projects examined, thanks to the salience Reuven Pedatzur, Ha’aretz journalist, afforded the project. Moreover, Pedatzur’s negative framings of the Arrow project were the most salient, such that the project was framed more negatively than positively, as was also the case for the Merkava tank project, which was framed negatively by Ha’aretz journalist Amnon Barzilai, though its salience was much lower. Hence, the findings of this study contribute to constructing a normative and effective model for journalistic work. The model centers on personal affinity for the topic covered, a sense of mission regarding the need to change the policy of a political institution, specialization in and study of the topic under consideration, a solid standing in the world of journalism, journalistic experience, backing from high quality and anti-establishment journalistic institution and support from the military (the air force in this case) and the political elite.

Does EU regional policy promote local TFP growth? Evidence from the Italian Mezzogiorno

AbstractTotal factor productivity (TFP) explains the bulk of the differences in income level across territories. A major policy issue refers to the ability of place‐based policy to promote TFP growth in backward areas. We investigate the effect of the European Regional Development Fund (ERDF) on local TFP growth in Southern Italy between 2007 and 2015. By using different empirical models (least absolute shrinkage and selection operator (LASSO) cross‐section, panel fixed‐effect regressions and a spatial regression discontinuity design), we show that, on average, local TFP seems to be rather unresponsive to EU programmes. Some suggestive evidence of a positive effect is found for ERDF infrastructure investments and for the areas characterized by higher institutional quality and population density.

Do macro‐prudential policies jeopardize banking competition?

AbstractMacro‐prudential policies that are adopted to strengthen the resilience of the financial sector to systemic risk impose additional restrictions on bank lending and other activities, altering the structure of the banking sector. In this article, we empirically investigate the extent to which macro‐prudential instruments affect one of the bank characteristics, bank competition, for a sample of 58 countries. The robust finding is that macro‐prudential policies are adversely affecting bank competition, in particular, this is driven by liquidity‐ and capital‐related instruments. The negative effect can, however, be mitigated in countries with high institutional quality and high bank supervisory powers.

Does China's outward direct investment improve green total factor productivity in the “Belt and Road” countries? Evidence from dynamic threshold panel model analysis

Following the “Belt and Road” (B&R) initiative, China has significantly increased its outward direct investment (ODI). Although these investments help to boost these countries' productivity, their impacts on the environment are still controversial and deserve careful investigation. This study for the first time examines whether China's ODI has improved the green total factor productivity (GTFP), a comprehensive index for environmental quality and productivity. Moreover, a new data set composed of ICRG, World Bank WDI, Heritage Foundation, and Wind databases is used to match the panel data of 46 B&R countries for the period of 2003–2016. A newly developed dynamic threshold panel model with GMM characteristics is utilized to explore the possible nonlinear relationship with full consideration of heterogeneity. The empirical results indicate that there is no pollution shelter effect on China's ODI. With the increase in China's ODI, the GTFP of the B&R countries has been significantly improved. Additionally, China's ODI has a greater role in promoting GTFP in B&R countries with higher institutional quality. The positive effects of China's ODI on the GTFP of B&R countries depend on the institutional qualities of the countries, and the enhancement effect becomes greater when the countries have better institutions. There is also evidence that China's ODI significantly promoted the GTFP of countries in the East Asia and Pacific region, South Asia, Central Asia and Europe, while China's ODI did not significantly promote the GTFP of countries in the Middle East and North Africa.