New Institutional Economics Research Articles

Catholic Social Thought and New Institutional Economics: An Assessment of Their Affinities and Areas of Potential Convergence

AbstractThe potential link between Catholic social teaching (CST) and the theoretical developments associated with new institutional economics (NIE) are explored. The emphasis is on the contributions of two Nobel Prize winners in economics—Douglass C. North and Elinor Ostrom—and on the work of political scientist Vincent Ostrom. By adjusting the neoclassical presumptions dominating modern economic theory to include culture, ideas, and religious beliefs in the analysis of economic behavior, the economic and social theorizing developed by these scholars advances a framework that has significant affinities with CST’s foundational critique of economic concepts and theories and with its normative position regarding the nature and functioning of social and economic systems.

An institutional analysis of Galician turbot aquaculture: Property rights system, legal framework and resistance to institutional change

Galicia, located in the northwest of Spain, is one of the main producing regions of turbot in Europe. Although the beginnings of the sector date back to 1985, its consolidation and expansion took place in the 1990s when more than a dozen companies joined the sector. However, in recent years, the production has stagnated. Part of this phenomenon can be explained by the fact that the new granting of occupancy of the maritime-terrestrial domain and the granting of activity licences to the sector have come to a standstill. This paper analyses the institutional framework of the sector from the perspective of the New Institutional Economics (NIE), describing the role of the public administration, the formal rules, the organization of the sector and the system of property rights. Thus, the actors and the previous legal framework that led to the legal paralysis of the sector will be characterized. There were three attempts to elaborate a definitive aquaculture plan but, due to the opposition of interest groups and the political dynamics of the Galician region, were cancelled.

Modi government plank & reforms for institutional development: An investigation

World is moving from socialist to capitalist’s mode of economy with an objective of fostering development with unabated pace for which nations are searching alternative approach of development. New institutional economics (NIE) is one such approach that has emerged recently which addresses issues of economic growth from a wide range ofperspectives such as political, cultural, legal, behavioral and social. The present-day NDA Government in India, led by Shri Narendra Modi is an epitome of this. This paper is exploratory and attempts an in-depth analysis of how the Modi Government has positioned the Indian economy on the trajectory of institutional development. His government has created both formal and informal institutional framework for creating, regulating, transforming markets and auguring the economy. In fact, Modi government plank for institutional development is aimed at fostering the mission of sowing the seeds of capitalism and India’s growth take-off.

Opportunism in Corporate Management

A growing interest in the phenomenon of economic opportunism can be mainly explained by new institutional economics (NIE). It has changed the limitation of that phenomenon into the main method of increasing the efficiency of business entities. Opportunistic attitudes and behaviour can be particularly observed in a business entity. A tendency towards opportunism should be considered both while entering contracts and while developing a strategy for a company. The article is aimed at presenting the essence of opportunism and at defining its place in new institutional economics.
 It is also aimed at identifying opportunistic attitudes in corporate operation and at indicating the ways to limit such attitudes.
 While analysing the role of opportunism in corporate management, the main focus shall be set on opportunistic interdependencies in corporate governance. Opportunistic attitudes may be presented not only by the management board of a company but also by its other stakeholders. They may use incompleteness of agreements that have been entered into or asymmetry of information in order to increase their gain at the expense of others. The article provides a more detailed analysis of opportunistic attitudes presented by employee organisations in highly developed countries as well as in post‑communist countries, where opportunism is manifested in demanding attitudes or in protection of monopolist positions.

New Institutional Economics

This entry in the Oxford Handbook of New Private Law describes the parallels and mutual dialog between New Institutional Economics (NIE) and New Private Law (NPL). It observes that both fields share more than the word 'new' in their titles. NPL and NIE share methodological orientations; they share scholarly priorities; they have influenced each other; and they offer parallel paths ahead. The fields also reinforce each other, as NIE focuses on problems governed by private law and, reciprocally, private law reflects the teachings of NIE. And both scholarly movements share common principles: both NPL and NIE exhibit the hallmarks of interdisciplinary, scholarly pluralism, and an inquisitive focus on real-world, tractable problems. The chapter concludes with some thoughts about the future of NPL, and in particular the lessons it can take from NIE’s successes.

Significance of uncertainty in explaining institutional change in Douglass C. North’s approach

Motivation: Studies on nature and effects of uncertainty in a non-ergodic world became in Douglass Cecil North’s concept a starting point for explanation of economic changes mechanism. The origin of North’s studies on uncertainty is related to one of key research problems relevant to the emergence of New Institutional Economics (NIE) approach, that is answering the question why some countries are rich and others poor. This problem, according to NIE representatives, cannot be satisfactorily explained in the framework of neoclassical paradigm based on assumptions of perfect information, ideal rationality of market actors and zero transaction costs. Aim: The purpose of the article is to present D.C. North’s concept of uncertainty as a source of beliefs and creating institutions (‘rules of the game’) which place human environment in order. Results: North’s breakthrough legacy is in emphasizing the role of human intentionality, growth in the stock of knowledge, as a result of human learning, and common cultural heritage in determining the direction and dynamics of economic changes. Considerations included in the article will enable proving the significance given by North to institutions in reducing uncertainty resulting from the nature of non-ergodic world and thus creating basic incentives for growth and evolutionary economic changes. Finally, the analysis conducted for that purpose in this article will show the original contribution of D.C. North’s institutional-cognitive approach to the development of NIE (and economic theory in general) in explaining institutional conditions of development.

Slavery and Athens’ Economic Efflorescence

Following a recent wave of literature arguing for significant growth in the ancient Greek economy, several ground-breaking books have sought to explain this phenomenon through the lens of New Institutional Economics (NIE). The undeniable prevalence of slavery throughout ancient Greek history, however, has not been substantially integrated into these new analyses. This essay intends to address this problem, by elucidating some of the ways in which slavery contributed to the economic efflorescence of Greece’s late archaic and classical period (600–300 BC) within an institutionally focused approach. Examining specifically the state of Athens, this study contends that not only did the system of slavery import a vast amount of labour from other areas of the Mediterranean into the Athenian polity, but it also directed labour towards economically productive aims that were otherwise limited by Athens’ societal framework. The use of slaves in milling operations provides a key and often overlooked example, which will here be used as a case study.

Linking institutions and technical changes in a developing context: historical evidence from Iran

ABSTRACT The roles of institutions in blocking successful technological changes are the prime concerns of this paper. A mixed framework is developed for this purpose based on concepts from national innovation systems (NIS), New Institutional Economics (NIE), and some sociological perspectives to policy and technology. In particular, this study shows how the institutional environment, called civic epistemology in this study, has framed the experience of industrialization in Iran through setting specific rules and regulations that in turn hindered technological learning. The general perception to the world (assumptions about the system), apprehension of the process of industrialization (assumptions about the problem), and comprehension of technology (assumptions about the solutions) are the constitutional elements of civic epistemology. They have framed the industrial regulations of the country to remove all barriers of machinery imports, stabilize the rate of currency exchange, allocate revenues of oil exports to such imports, and protect the local market through applying high tariffs for imported goods. Hence, more work at the cognitive level is required to complete the application of NIS in the context of developing countries. Some implications are discussed at the end.

Exploring Relations Between New Institutional Economics and International Business: Addressing the Air Transport Industry

This study explores how the literature regarding internationalization of airline industry and New Institutional Economics (NIE) interconnect. Through a computational bibliometric analysis, an initial sample of 967 articles contemplating research between 1970 and 2018 is investigated to check appearance of terms related to NIE and, ultimately, to obtain a comparison between the evolution of NIE reasoning and its impact on the air transport industry internationalization literature. Four main research questions are proposed and results may clarify the extent to which airline internationalization has been under discussion with regards to institutional environments, hybrid forms of organization and governance.

Establishing a metropolitan transport authority in Istanbul: A new institutional economics framework for institutional change in urban transport

Rapid urban growth and resulting urban transport problems in developing cities trigger major transformative reform attempts. However, these attempts might fail due to ignoring the role of the institutional environment. Changing the governance structure from a fragmented governance structure to a centralized transport authority is such an institutional change that should take into account the surrounding institutional arrangements. In this paper, drawing from new institutional economics (NIE) literature, a new framework for institutional change in urban transport is proposed to guide those institutional initiatives. To materialize the theoretical considerations regarding this institutional change framework, attempts to establish a metropolitan transport authority (MTA) in Istanbul constitute the case study of this paper. Having a population of nearly 15 million people with radically increasing urban transport problems, city of Istanbul has considerable amount of the urban transport governance problems due to its fragmented and weak institutional setting. Based on the developed framework and lessons drawn from the Istanbul case, our results highlight the importance of examining the institutional environment of urban transport systems by identifying the institutional levels in institutional transformation initiatives.

RETHINKING THE EPISTEMOLOGY OF ISLAMIC ECONOMY: ABBAS MIRAKHOR’S CONTRIBUTION TO THE CURRENT DEBATE

In the last three decades, Islamic economics and finance have experienced significant developments. At the same time, several problems arise, not only technical but also epistemological. On that basis, the author is interested in studying Abbas Mirakhor’s epistemological thought, in the hope of providing answers to these problems while providing direction for the next steps. As a qualitative study, the primary data source of this research is the work of Abbas Mirakhor. This study uses philosophical, sociological and historical approaches in addition to the literature review approach. The results of the study show that in the view of Abbas Mirakhor, the source of the formulation of the Islamic economic concept is the Qur’an, Sunnah, and Islamic jurisprudence. The reading of the Qur’an and Sunnah is done through the perspective of the NIE (New Institutional Economics). Through this approach, where Islam is placed as a rule-based system, the Islamic economic scaffolding formulation consists of rules about property, markets, distribution and redistribution, risk sharing, contracts, and trusts. Adherence to institutional scaffolding correlates with economic growth. This institutional scaffolding is supported by an incentive structure through the concept of barakah.

THEORY OF CONTRACTS IN THE LIGHT OF NEW INSTITUTIONAL ECONOMICS. THE SPECIFICITY OF AGRICULTURAL CONTRACTS

The article reviews Polish and foreign economic literature regarding new institutional economics (NIE) and various research approaches used in the framework of NIE. Particular attention was paid to the economic theory of contracts and the transaction costs, as the limitation of transaction costs is indeed the main stimulus for contract signing. Special attention was given to agricultural contracts and their specificity. The article discusses different theories applied in the analysis of contracts, characterizes contracts according to different criteria, and draws attention to the importance of transaction costs in the theory of contracts. In addition, factors which contribute to these costs have been identified, indicating the necessity of adapting the principles of transaction cost economics to the needs of the agricultural sector.

Urban public transport systems from new institutional economics perspective: a literature review

ABSTRACTThe paper provides a novel perspective for the examination of urban public transport (UPT) systems based on a literature review of new institutional economics (NIE). New institutional economics is a rapidly growing interdisciplinary economic perspective which seeks to explain the role of institutions in the performance of socio-economic systems. It encompasses various economic theories including transaction cost economics, agency theory, contract theory and property rights economics. Although NIE-based approaches have been utilised in different sectors and policy areas, management and organisation of UPT systems is a policy area where the implications of NIE-related theories have not been thoroughly explored. UPT systems are complex and involve a variety of transport actors such as transport authorities, regulators, operators and passengers. These actors interact with each other as embedded in an institutional environment which structures the rules, hence determines the incentives, roles and liabilities for the actors. However, previous studies have generally taken this institutional environment as given and have not problematised it. This paper seeks to provide a concise literature review of UPT through the perspective of NIE to delve into the institutional configuration of UPT systems so that an institutional account of UPT is given. An institutional framework is proposed to help structure the current literature on UPT. To explore the applicability of NIE in conceptualising and problematising the issues concerning the management of UPT, the paper attempts to delineate the institutional landscape of UPT. The informal and formal institutions, governance structures and contractual relationships in UPT are examined through the lens of NIE. These institutional levels constitute the building blocks for the institutional arrangement of the UPT systems, and the proposed institutional framework for the analysis of UPT systems reviews and examines each institutional level in a systematic way. The paper explores the potential added-value that NIE provides, identifies the research gaps in the literature, and finally, shows the future avenues for NIE-inspired UPT studies.

A Christian Response to the Conflicting Relationship Between Slave and Master in A Christian Household

Abstract This paper seeks to investigate Paul’s response – based on his theological thoughts on love – on the conflicting relationship between Christian master and slave. With the aid of New Institutional Economics (NIE), two major characteristics of the relationship between a master and slave will be explained, namely objectifying and manipulating the relationship. Then, this paper will try to read Paul’s response to the conflicting relationship in the letter to Philemon – how he used different rhetoric to persuade Philemon to change his relationship with his slave in different levels, namely, theological perspective, core values and practical concern.

Institutions and Rural Stagnation in Eastern Indonesia

This article addresses why agricultural productivity is still very low in peripheral parts of eastern Indonesia. The paper identifies rules and norms underpinning traditionalism. It further addresses how increased land-use efficiency can be supported while maintaining communal land ownership. Information collected from in-depth interviews was analysed based on new institutional economics (NIE) theory. I argue that the government, adat leaders, the Catholic Church, leading businesses, and internationally funded NGOs are organisations contributing to the status quo. Policy recommendations include awareness among international donors of what NGOs really do. Civil society organisations could contribute to a more efficient and democratic government and less feudalist traditional leadership. A government tax on fertile land could form the basis for a cadastre system, secure farmers’ permanent land-user rights, and also enhance land productivity, without reducing the values of a rich culture based on communal land.

Are We Forgetting Something? Remarks on the Connections Between Douglass North’s Contributions and Original Institutional Economics

:Douglass North’s latest works have become central to the current discussion regarding the differences and similarities between new institutional economics (NIE) and original institutional economics (OIE). We seek to contribute to this debate by offering a specific analytical perspective to evaluating North’s contributions. After defining a set of philosophical and methodological principles that specifies OIE, we endeavor to verify if and how North’s work relates to these foundations. We believe that this methodological perspective brings to light a fundamental issue not stressed by earlier analyses: the profound difference between the institutionalisms regarding the role of market order as a mechanism of human sociability.

Institutions and Capitalist Development: A Critique of the New Institutional Economics

New Institutional Economics (NIE) is a branch of neoclassical economics that regards the institutional setting of exchange (markets) as the key force accounting for differences in nations' economic performance. Though originally focused on economic institutions, this approach has paid increasing attention to the political institutions giving birth to the former. Why Nations Fail? by Acemoglu and Robinson (2012) is a leading example of such attempts. As with other NIE works, it suffers from empirical and theoretical problems. It fails to properly uncover the historical character of institutional forms of social reproduction. Consequently, it fails to understand capital accumulation as an autonomously regulated, global-scale process. Contrary to NIE authors, national developmental and institutional patterns, and inter-state relations, should be seen as particular expressions of the general dynamics and historical potencies of capital accumulation on a global scale.

Transaction cost economics of procurement models in public transport: An institutional perspective

In recent years, concern has grown over good practices in the procurement processes in public transport. Although promoting competition by competitive tendering to gain efficiency and increase service quality has gradually become common around the world, the applicability of this model in weak institutional environments has some uncertainties. Drawing from new institutional economics (NIE) literature, transaction cost economics (TCE) approach presents important theoretical insights to comprehend the nature of authority and operator relations by underlining the institutional factors that make such procurements effective or not. We argue in this paper that the extent to which transaction structures are embedded in the institutional framework has a substantial impact on the long-run performance of the public transport contracts. A case study of the experience of Istanbul’s public bus transport system, a hybrid regime combining the elements of direct award and tendering and composed of both formal and paratransit transport modes, is proposed to support our theoretical arguments. Our study reveals that all-encompassing contractual solutions which do not take into account the broader institutional environment (culture, norms, policy preferences, property rights etc.) may not work as intended, calling for more hybrid solutions, particularly in weak or developing institutional settings.

Towards an effective partnership policy for improving urban low-income housing provisioin in Nigeria: New institutional economics perspective

Recent critique against the past urban housing provision strategies in Nigeria was that the low-income groups are marginalised. It then led to the adoption of public private partnership (PPP) initiative with a view to pursuing the broad goal of housing-for-all in Nigeria. Most recent studies have however criticised the effectiveness of the existing PPP practice in the housing provision structure without providing a pragmatic suggestion towards an effective framework for improvement. It thus raised the question; what are the main causes of ineffectiveness of existing PPP in housing provision and how can an effective PPP policy framework for urban low-income housing be achieved in Nigeria? This study utilised the concepts of new institutional economics (NIE) -a theoretical and methodological underpinning for multi-actors’ policy matters. Using qualitative data from structured interview and credible literature sources, findings indicate that uncertainties in land accessibility, high transaction costs and the developers’ high profit agenda, are the major causes of PPP ineffectiveness for housing provision, which are also attributed to lack of a specific PPP policy that recognises all income groups and their roles on housing provision. End-users suggested that governmentcould have a negotiation with land owners and building materials dealers to address the housing problem. In conclusion, it is established in this study that adoption of all-inclusive conceptual approach described within the context of NIE thought can facilitate an effective planning for urban low-income housing in Nigeria.

The emergence of post-crisis regional financial institutions in Asia—with a little help from Europe

Faced with the negative impact of regional and global financial crises, Asian countries have established joint-solution mechanisms over the last two decades in order to better protect themselves from short-term outflows of capital and from currency speculation. Despite some progress being made in regional financial cooperation, especially by the countries of the ASEAN+3 grouping, the overall degree of financial integration within the region remains surprisingly low, however. This contrasts sharply with the keen interest of many Asian countries in gaining a stronger voice within the multinational finance institutions (MFIs), and especially within the International Monetary Fund (IMF). Unable to initiate major governance reforms of the MFIs, Asian countries have not only set up regional support liquidity arrangements but also their own multilateral development banks (MDBs). While the USA and to some extent Japan have tried to prevent a rebalancing of power within the global financial architecture, major European countries have actively supported these changes by becoming founding members of the China-led Asian Infrastructure Investment Bank (AIIB). Taking a New Institutional Economics (NIE) perspective, the paper aims to explain why some regional financial institutions are more attractive for Asian countries than others and why European countries are supporting Asia’s attempt to gain more weight in global financial governance (GFG)—and, thus, contribute to the acceleration of the power shift away from the USA toward emerging Asian economies in general and China in particular.