Institutions Matter Research Articles

Inward FDI and the quality of domestic institutions: A cross-country panel VAR analysis

Domestic institutions are recognized as important factors in attracting foreign direct investment (FDI), and spurring economic development in host countries. There is increasing evidence, however, that FDI may in turn affect and shape domestic institutions, and it is generally difficult to disentangle these two effects. The present paper aims to shed light on this issue using extensive data on the quality of institutions and on inward FDI in 102 countries over a period of 25 years. We distinguish between different types of institution, FDI, and country, and we adopt a panel vector autoregression (VAR) approach to identify the direction of causality between the two variables. Our findings suggest that the quality of institutions matters for attracting FDI, but also that higher inflows of FDI have a significant short-term impact on the institutional quality of recipient economies. We also find that such a relationship varies with the type of FDI considered, and differs between transition and developing economies.

What feeds on what? Networks of interdependencies between culture and institutions

Culture and institutions both matter in shaping trajectories for socioeconomic progress. As the debate on causal directionalities between culture and institutions is still ongoing, we recast its perspective: a complex network of symbiotic relationships ties a multitude of cultural and institutional factors together. We blend the institutional complementarities literature with symbiosis theory, and place it into the context of a data-driven approach that extends correlation network analyses. We frame each single interdependence between a cultural and an institutional factor as an asymmetric symbiotic relationship in which a ‘host’ feeds a ‘symbiont’: the latter is more dependent on the former. In our computed network, each relation locates within a broader context of pathways and network constellations. We apply our approach to Brazilian municipal data. Our results confirm high complexity in the coevolution of culture and institutions and suggest an emerging pattern in which cultural factors are more likely to be hosts than institutions or social capital. In the Brazilian municipal reality, the institutional innovation of participatory councils bears the potential of game-changer in the system, while tax collection strongly depends on cultural factors i.e. the (in)formality of the economy and family ties.

The poverty effect of democratization

In this paper we examine the interrelatedness between regime types of democracy and non-democracy and poverty reduction. The liberal international order and democratic principles have been challenged by the populace’s general discontent in recent years, while the reduction of poverty is a central goal of the global development agenda as embodied by the Sustainable Development Goals. Democracies could promote poverty reduction by encouraging redistribution, lifting barriers for poor people, or giving better access to the institutions of society. Democracies might hinder poverty reduction if they are captured by elites or become dysfunctional in general. Our data cover around 140 countries and a period from 1980–2018. We use a mix of methods to address endogeneity concerns. In dynamic panel estimates that control for past influences of poverty, GDP and inequality we find no significant impact of democratization – measured mainly by electoral democracy – on poverty rates. In more flexible and causal treatment effects estimates we find democratization reduces poverty rates by about 11–14% in the first five years after democratization on a 95% significance level and about 20% 10–14 years after democratization on a 90% significance level. Although we find mixed results, we are still confident that democratic political institutions matter greatly, and societies are better off when the political systems are more inclusive. The fact that our results do not find clear support for this suggest that electoral democracy – without further aspects considering the level of democracy – does not have a clear-cut effect on poverty.

Comparative impacts of the COVID‐19 pandemic on work and employment—Why industrial relations institutions matter

AbstractThis introduction assesses the international impacts of the COVID‐19 pandemic on work and employment. It outlines conceptually why industrial relations institutions matter for shaping policy choices across different countries. This includes countries in the Global South that are not covered by conventional varieties of capitalism theories. An important focus is what IR institutions and policies played a protective role in the decommodification of labor during the pandemic, notably short‐time working (furlough) schemes, tripartite cooperative pacts, works councils, collective bargaining, and active labor market policies. IR institutions continue to matter, and the contributions in this Special Issue can inform future research.

The E-learning of Network Environment

E-Learning is on the cusp of a transformation. For several years, it has been a matter of educational institutions implementing systems and processes for delivering courses online. That was a logical. 1st step. that has largely been accomplished.Today’s e-Learning challenge is considerably greater than just bringing courses online, one with a pay-off that will revolutionize education inHuda Abdul Alle Al-AmweeAl-Mustanseriy UniversityComputer scienceThe E-Learning of Network Environment …...………..Huda Abdul Alle Al-AmweeJ. OF COL. OF B .ED. NO.51 2 / 2007ways that online classes only begin to suggest. That challenge is to break through course-based limitations in order to create true Networked Learning Environments. A Networked Learning Environment in the Internet age applies new technology to a very old concept—that learning is much more than classes and grades. It is about the learning that takes place in a vibrant community of people and resources. The Internet has removed the limits of time and proximity that once restricted this community. In a true Networked Learning Environment, any student, instructor or researcher can access any learning resource at anytime from anyplace. Similar to the Internet, a Networked Learning Environment is really a network of networks—as simple as a lecturer and her class or as complex as a global web of instructors collaborating to develop a brand new curriculum. The power of the Networked Learning Environment today is that it creates unlimited possibilities for students and faculty, far beyond the limitation of books, bricks and mortar. While most institutions are evolving toward the Networked Learning Environment one step at a time, some are taking the leap all at once. This white paper describes the NLE and lays out Blackboard’s vision for providing solutions that will help educational institutions realize their goals.

Do informal institutions matter for the economic resilience of European regions? A study of the post-2008 shock

Do informal institutions matter for the economic resilience of European regions? A study of the post-2008 shock

Deep preferential trade agreements and export efficiency in Ghana: Do institutions matter?

Preferential trade agreements with environmental provisions (Deep PTAs) have introduced a new layer of costs to bilateral trade. For a country seeking to grow its exports to generate sufficient foreign exchange for economic transformation, it is essential to investigate the effects of the expanded preferential trade area on its export efficiency. Therefore, this paper, employs the stochastic frontier gravity model to investigate Ghana's bilateral export efficiency using a panel of 44 of her export destination countries for the period 2007 to 2019. The paper finds that Ghana’s bilateral export trade is inefficient, implying huge potential exists. It further reveals that PTAs with environmental provisions reduce Ghana’s export efficiency. The reduction in export efficiency lessens with improvement in institutional quality. The paper recommends that the regulatory roles of Ghana Standards Authority and the Environmental Protection Agency should be strengthened to ensure that exporters meet target market regulations to continue to benefit from the bilateral PTAs. Given the negative effect of the exchange rate on export efficiency, the Bank of Ghana and the Ministry of Finance should urgently enhance macroeconomic stability to provide a stable platform which should promote the country’s export value and volume.

Ownership Transformations in a Post-Transition Economy: Which Institutions Matter? Evidence from the Polish Banking Sector

In this article, we investigate what kind of institutions affect bank ownership transformations in a post-transition economy. We use statistical data concerning mergers and acquisitions in the Polish banking sector over the thirty years since the political transformation. Our results indicate the significant role of political and cultural institutional dimensions in stimulating ownership transformation. The importance and current deficits in explaining Polish banking ownership transformations are evaluated through institutional analysis, emphasising the path dependence role and the critical junctures that influence the development of institutions. Identifying which institutions matter the most is crucial for post-reform economies when selecting the most effective policies. Classification codes G21, G32, G34

Foreign Direct Investment in Less Developed Countries: Do Institutions Still Matter? Evidence for Central African Countries

This paper analyses the FDI flows determinants in less developed countries with evidence in Central African countries. We mention that if institutions matter in attracting FDI flows; this is not only due to good institutions or political regime types as focused in economic literature but also due to economic sectors which must be considered as investors decision procedure.

Nascent markets: Understanding the success and failure of new stock markets

We study the success and failure of 59 newly established (nascent) stock markets since 1975 in their first 40 years of activity. Nascent markets differ markedly in their success, as measured by number of listings, market capitalisation, and trading activity. Long-term success is in part determined by early success: a high initial number of listings and trading activity are necessary, though not sufficient, conditions for long-term success. Banking sector development at the time of establishment and development of national savings over the life of the stock market are the other two most reliable predictors of success. We find little evidence that structural factors such as country size or legal and political institutions matter. Rather, our results point to an important role of banks, demand factors, and initial success in fostering long-term stock market development.

Do institutions matter for entrepreneurial development?

Since the collapse of the Soviet Union, the differing impact of institutions on entrepreneurship development is undeniable. Several post-Soviet countries benefitted from early international integration by joining the EU, adopting the euro, and becoming OECD members. This process enabled entrepreneurship to develop within institutional contexts where democratic and free market principles were strengthened. In general, however, post-Soviet economies continue to be characterized by higher levels of corruption, complex business regulations, weak rule of law, uncertain property rights and often, lack of political will for institutional change.

FDI Flows in resource-rich countries: does the quality of institutions matter?

Relevance. Foreign investment is likely to be attracted to resource-rich countries because of their wealth of natural resources. However, the fact that foreign direct investment (FDI) contributes less than 10% of these countries’ GDP indicates that FDI has a non-proportional impact when compared to the size of the natural resources. Hence, it is critical to identify the missing link impeding resource optimization through FDI. Research objective. Given the significance of FDI, the study seeks to ascertain whether the quality of institutions in resource-rich countries influences FDI inflows. This is significant because resource-rich countries may have other factors that encourage FDI but do not result in resource optimization. Data and methods. The study employed panel data analysis to analyze the impact of FDI on economic growth in resource-rich countries and the role of institutions in attracting FDI. The study relies on the Augmented Mean Group Estimator and on the annual data from the World Bank's World Development Indicator and the World Bank's World Governance Indicator for the top ten resource-rich countries. Results. Our preliminary evidence indicated that FDI had a positive and significant effect on economic growth in resource-rich countries. The extent of the influence, on the other hand, is minimal for all categories of countries. Our main results revealed that institutional quality has a significant pull effect on FDI, with trade openness playing a key role, particularly in resource-rich nations with well-developed institutions. Conclusions. We found that institutional quality plays a critical role in attracting FDI, which could have hampered natural resource optimization. Furthermore, countries with high institutional quality and less restrictive investment policies attract more foreign direct investment (FDI) than countries with low institutional quality and with investment policies ranging from moderate to restrictive. In general, resource-rich countries, particularly those with weak institutional qualities, should address the gap in institutional quality to attract more inward investment.

Institutional Change, Growth, and Poverty Levels in Pakistan (The Presidential Address)

It is now well-recognised that institutions matter in the growth process both directly and indirectly. Well-functioning institutions lead to higher investment levels, better policies, increase in social capital stock of a community, and better management of ethnic diversity and conflicts [see for example North (1990, 1994); Jutting (2003); Rodrik, et al. (2002); Dollar and Kray (2002); World Bank (2002); Aron (2000); Chu (2001) and Frischtak (1995)]. That the decay of institutions has led to poor governance—and the urgent need for improved governance in Pakistan particularly—has been well-documented in DRI/McGraw-Hill (1998); Pakistan (1999) and Hassan (2002). Transparent, participatory, and efficient working of institutions ensures correct priorities and appropriate policies; their effective and efficient implementation results in high growth, better income distribution, and alleviation of poverty. Institutional development has been very slow in Pakistan, and more often than not these have been abused by the èlite to extract rent [Hussain (1999)]. Over the last three decades, and especially in the 1990s, even the institutions that existed have degenerated. Poor governance resulting from the mal-functioning of institutions has denied the poor any participation in the decision-making process, and they have failed to derive any benefit from the rising levels of per capita incomes.1 The rising poverty in turn has led to further decay of institutions and the poor are caught in the vicious circle [see Hassan (2002)].

Trade Policy, Openness, Institutions

This paper examines the importance of institutions vis-à-vis openness and trade policies in determining per capita income differences across countries. Recent literature has tried to demonstrate that more open economies grow faster. On the other hand, it has also been asserted that it is not openness per se but institutions and good governance that matter in promoting growth. This paper attempts to test this hypothesis across a crosssection of nations. Unlike other papers in the field, we have tested not only for the degree of openness but also for trade policy indicators, as well as a fuller set of six institutional variables. Our broad finding is that although institutions matter, trade policies are also relevant to promoting growth, whereas openness per se has little impact on growth. JEL Classification: F15; O10. Keywords: International Integration; Economic Development.

The Future Governance Agenda for Country Assistance Strategies: An Approach to Governance Reform (The Iqbal Memorial Lecture)

The development industry is increasingly recognising that institutional constraints in developing countries are fast becoming a primary limiting factor for growth. Institutional decay and breakdown is also placing the stability of democratic political systems at risk. If this decay and breakdown is not reversed, ultimately democracy and free markets in developing countries will also face increasing risks thereby creating further negative impacts on institutions. Reversing this vicious cycle must be the subject of international development pre-eminence as all “sectors” rely on primary institutions to function.1 The framework for institutional assistance interventions to developing countries is missing or has remained marginally addressed. The Millennium Development Goals (MDGs) and the Poverty Reduction and Growth Facility (PRGF) do not directly address the governance aspect of the post colonial societies and its role in achieving poverty reduction or millennium development goals.2 If “institution matter” what should the international assistance approach to designing interventions that promote governance and institutional revival be? What is the knowledge base required to design governance interventions? What is the new governance research that can produce that knowledge base?

Demokrasi Sebagai Diskursus dan Deliberasi Menurut Jűrgen Habermas

<p><strong>Abstract:</strong> This article attempts to reconstruct and analyse the Habermas’ view on democracy as discourse and deliberation. The concept of deliberative and discursive democracy is a model of criticism toward an attempt to narrow the conception about democracy simply as an institutional matter. The concept of deliberative democracy emphasizes the importance of public discursive participation of citizens by establishing critical public sphere that is the heart of democracy. Furthermore, Habermas highlights that there is no rule of law without radical democracy. Such radical democracy is expressed through the active involvement of citizens in public sphere to express ideas that have impact on political decisions and public policy. This article accentuates that the transformation of public opinion to be a political power is an ongoing process. Therefore, an authentic democracy presupposes a critical publicity and democratic political culture. Without a voluntary citizens’ initiative in this regard, a state will have no future. To support thisarguments, the writer uses literature research method by analyzing the main work of Jȕrgen Habermas on deliberative democracy namely Faktizitӓt und Geltung (Facts and Norms), as well as some secondary literatures dealing with the thoughts of Habermas on democracy.</p><p><strong>Keywords:</strong> Habermas, deliberative democracy, discourse, pluralism, state</p>

ARCHITECTURE OF EDUCATIONAL INSTITUTIONS OF UZHHOROD 1919 – 1938 AND THE CONCEPT OF THE WELFARE STATE IN THE CZECHOSLOVAK REPUBLIC

The article deatl with a comprehensive study of educational institutions built in Uzhhorod during 1919 – 1938. Based on archival sources and literature, the author forms a representation of the qualities of new educational buildings, features of architectural styles, principles of construction of educational institutions of the modernist era in the Czechoslovak Republic, and details of the planning of objects on the example of Uzhhorod, as well as in some cases – characteristic teaching approaches. School buildings are built according to new standards, which is caused by the emergence of a new movement in European architecture – modernism. However, the peculiarities of this architecture are not limited to issues of aesthetics and technology, because new buildings are built according to new standards in matters of hygiene, comfort and energy saving. The architecture of the interwar period is perceived and analyzed in the article as a tool of the state policy of the republic in the development of one of the most important social spheres – education. The article emphasizes the opening of new educational institutions for the city, such as a Roma school, a vocational school, a school for women's professions, and a building of a gymnasium of the Jewish community of Uzhhorod. The author conducts an analysis of the development, reformatting and renewal of already existing institutions for which new buildings were planned or built: secondary schools, midwifery school, school of the Jewish community and others. Education is becoming mandatory, the situation regarding the language of instruction is improving significantly, most vocational education institutions are free or almost free for students. According to the author, the opening of vocational schools in Uzhhorod as a new form of education became an important factor in solving the problem of unemployment and demonstrated the foresight of the Czechoslovak government's approaches to solving social and economic issues. Most of the planned objects of educational institutions in the interwar period in Uzhhorod were not implemented due to the economic crisis and the consequences of the First Vienna Award. However, the plans of the government of the republic in the matter of educational institutions in Uzhhorod demonstrate the scale of approaches in solving the issues of creation and development of the educational sphere as an integral component of the formation of the welfare state.

The Helsinki Convention’s agricultural nutrient governance: how domestic institutions matter

ABSTRACT National policy styles and path-dependencies are affecting the abilities of Baltic Sea countries to deliver on their commitments under the Helsinki Convention. This article synthesizes evidence and insights from studies relating to the provisions on agricultural nutrient management, a main source of marine pollution. We contend that governments that are strongly concentrated vertically, while fragmented horizontally, lack capacity including with respect to informal institutions that can leverage implementation. As a stocktaking of institutional impediments to sustainable development, our analysis has wider relevance for other international agreements with Baltic Sea countries involved.

The charmed circle: identity in Utopia, unethical practices, and Augustine’s two cities

This article considers Utopia’s unethical practices alongside The City of God’s understanding of the earthly polity’s relationship to eschatology. In Augustine’s view, within the earthly city every person could potentially become a friend of the heavenly city in time, and the existing political situation must always be rendered partial and incomplete against the telos of eternity. These convictions stand in conspicuous contrast with Utopia. The Utopian system is in important ways founded on institutionalized practices which not only exclude non-Utopians (or ex-Utopians), but also habituate them to vice. Examining Utopia alongside The City of God illuminates how this ethical problem in Utopia is not just a matter of individual practices or institutions, but rather derives from a more fundamental metaphysical and theological outlook. Not only is Utopia invested in a Utopian/non-Utopian distinction; more significantly, this distinction has a tacit eschatological role, since Utopian thinking implies that degradation of one’s capacity for virtue decreases one’s potential to be saved.

Institutions – Economic Growth Nexus in Sub-Saharan Africa

This research explores the causal link between institutions and economic growth in Sub-Saharan Africa countries. System generalized method of moments (GMM) is applied to fit dynamic models for a panel of 43 countries in the region over thirteen-year period. Major findings include (1) per capita gross domestic product (GDP) is persistent in the region; (2) no significant cause-effect link between institution and economic growth of the countries; and (3) impact of institutions on economic growth appeared affected by control variables. The results show that institutions did not lead to economic growth in SSA countries. The finding adds to the already developing puzzle regarding whether institutions matter for economic development of nations. The study suggests further work in institution-growth studies for proper recognition of institutions role in explaining economic growth differences of countries. In this regard, current research identifies focus areas for future work, which includes considering institutions quality threshold and inclusion of indicators from informal institutions in addition to the formal ones.