Institutional Persistence Research Articles

History, Path Dependence and Development: Evidence from Colonial Railways, Settlers and Cities In Kenya

Little is known about the extent and forces of path dependence in developing countries. Colonial era railroad construction in Kenya provides a natural experiment to study the emergence and persistence of spatial equilibrium. Data spanning over one century shows that railroads determined the location of European settlers, Asian traders, and the main cities at independence. Europeans then left, Asians departed, and railroads declined in the immediate post-independence period, constituting local shocks to physical and human capital. Yet the colonial cities persisted. We test four explanations for path dependence based on institutional persistence, technological change, sunk investments, and spatial coordination failures.

Политэкономия институтов и развития: как важно быть инклюзивным. Размышления над книгой D. Acemoglu, J. Robinson «Why Nations Fail». Часть II. Институциональная динамика и выводы для России

We discuss the evolving views on institutions and development in modern political economy, and in particular the contribution to the field by D. Acemoglu and J. Robinson, explaining root causes of successes and failures in economic development. The focus of discussion is on inclusive and extractive institutional regimes - the former sustain economic growth, whereas the latter enable the elites to expropriate the rest of society. Although extractive institutions are inefficient and obstruct development, they are preferred by the elites and hence can be reproduced over long periods of time in vicious circles of economic and political inequality. We apply the above concepts and views to the post-Soviet period of the Russian history, where the market reforms of the early 1990s became a critical juncture which has shaped Russia's institutional regime for decades to come. It is argued that suppression of social participation and control at the time of market reforms in Russia has had long-term institutional legacy and resulted in the emergence and persistence of extractive institutions in post-communist Russia. The interplay between institutions and cultural change is discussed.

Elites, Institutional Change, Institutional Persistence and Economic Development: Lessons for Africa

In the essay, we show how the preference of political elites for special status and power translates to an institutional structure that not only maximizes their relative share of social wealth through predation but ensure they keep as wide as possible the gap between actual development and potential development. In exchange for de facto power, their choice of institution is one which yields them less rather than more wealth. Though developmental institutions will yield them more wealth, political elites still avoid choosing the socially optimal institution because the resulting political configuration will turn them into elites with merely de jure political power. We draw on a number of historical and contemporary examples to which our model applies. Drawing on the experiences of nations which have successfully transited from growth-inhibiting to developmental institutions, we isolated factors critical to the attainment of this transition. Factors considered included revolution or the threat of revolution, religion through it impact on human capital, international trade and entrepreneurship, external wars and political competition between countries. In examining barriers in the way of countries yet to transit, we identified ethnic diversity and natural resource endowment. Both have prevented to a large extent the emergence of common constitutional pact across elites belonging to groups with different complexities. The challenge remains overcoming these barriers. New pro-development elites are required to make the initial investments in efforts and organization required to upset the status quo. Only when they start would the larger society follow in their steps to sustain and implement the desired institutional change.

THE DIFFERENT IMPACTS OF DIFFERENT TYPES OF NATURAL RESOURCES ON POLITICAL INSTITUTIONS IN DEVELOPING COUNTRIES

1.INTRODUCTIONThere is now a large consensus that the quality of institutions is a pillar of economic development, alongside other important determinants such as geography, human capital, and openness (Knack and Keefer, 1995; Mauro, 1995; La Porta et al., 1999; Acemoglu et al., 2005; Rodrik, 2005; Kanyama, 2014).1 However, the determinants of the quality of institutions are still being debated. Acemoglu et al. (2005) argue that groups which win political power choose institutions that serve their interest, and that political power mainly depends on the distribution - or capture - of economic resources.2 In this paper we focus on natural resource endowment as a strong structural characteristic of economic resource distribution and institutional change in developing countries.The literature broadly supports the idea that rents from natural are harmful to institutional quality in developing countries (see Frankel, 2010; Van der Ploeg, 2011 for recent reviews). Firstly, appropriation disputes explain why natural can encourage rent-seeking, corruption, or conflicts (Boschini et al., 2007). Secondly, governments can also suffer from the so-called rent of natural through (i) taxation, (ii) spending, and (iii) group formation (Ross, 2001; Omgba, 2009). The effect suggests that when governments derive sufficient revenues from natural resources, they tax their population less heavily. In turn, the population is less likely to demand accountability from, and representation in, the government, following the so-called principle of no representation without taxation (Tilly, 1975). The spending effect suggests that rents lead to patronage, which dampens latent pressures for democratization (Atkinson and Hamilton, 2003; Vicente, 2010). The group formation effect suggests that the government will use its largesse to prevent the formation of contestant groups (Mahdavy, 1970; Anderson, 1987; Ross 2001; Andersen and Aslaksen, 2013).However, the concept of rentier states suggests that different types of natural could have different impacts on the quality of institutions. The idea is that natural differ in their ease of appropriation (or capturability of the rent), inducing a more or less unequal distribution of the rent. Thus, Bulte et al. (2005) distinguish between point resources and Point generate rents that can be more easily captured, and so are more harmful to the quality of institutions than diffuse resources. Similarly, Boschini et al. (2007) focus on the technical appropriability of a resource. They argue that such as diamonds or precious metals are easily transportable, storable and saleable, and are therefore more detrimental than agricultural products. Petermann et al. (2007) consider that rents from oil are more harmful than those derived from forests, because oil involves contracts of higher value and is more technology-intensive. Engerman and Sokoloff (1997) and Ross (2001) pointed out that oil rents are more likely to degrade institutional quality because they are easily captured by the central government (see also Robinson et al., 2014). Conversely, mineral or agricultural rents may contribute to improving the quality of institutions because they can be captured by a larger share of the population.We investigate whether rents generated by natural have a detrimental effect on institutions, by considering different types of natural characterized by their different degree of appropriability. Taking advantage of a large dataset covering developing countries, we use appropriate techniques for panel data (Fixed Effects model, GMM-System and 2SLS estimators) in order to take into account unobserved heterogeneities, endogeneity of rents, and institutional persistence. Panel data offer a solution to the endogeneity problem through the use of lagged values as instruments for endogenous variables (Lederman and Maloney, 2006). …

Information and the persistence of private-order contract enforcement institutions: An experimental analysis

We study an experimental market in which some sellers are prone to moral hazard, and in which a private-order contract enforcement institution exists that can mediate trade and prevent sellers from reneging on their contractual obligations. Using the institution to resolve the moral-hazard problem is costly. We demonstrate that in this market, the utilization of the private-order contract enforcement institution may make public and private market signals uninformative and inhibit learning. We study whether this potential information externality can limit adaptation away from the private-order institution when it is efficient to do so. Consistent with theory, we find inefficient persistence when the institution is used, but by contrast, efficient adaptation in other situations. Providing information to individuals who are using the private-order institution allows them to partially adapt.

Why do malfunctioning institutions persist? A case study of the Kingdom of the Netherlands

While all neo-institutional approaches to varying degrees of success aim to explain institutional persistence, none of them offer clear-cut explanations for the persistence of institutions that have become completely undesirable. The present article aims to analyze how such cases of institutional ‘lock-in’ can be explained, and to what extent the theoretical premises of historical and rational choice institutionalism are helpful in this regard. It does so by means of a case study of the Kingdom of the Netherlands, which is a unique, trans-Atlantic institutional structure that was established in 1954, but has since its foundation become increasingly dysfunctional and disliked by all parties involved. The analysis reveals that the survival of the Kingdom can be seen as an instance of extreme path-dependence, but also that rationalist notions of Pareto optimality and veto-players can contribute to explaining the persistence of this institution. Most conspicuously, however, the analysis reveals that the unique political structure of the Kingdom, constituting a hybrid between a federal and a unitary state, has prevented any attempts to reform the institutional structure.

Thick narratives and the persistence of institutions: using the Q methodology to analyse IWRM reforms around the Yellow River

A dominant form of integrated water resources management (IWRM) assumes that existing parochial path dependencies need to be overcome to transform fragmented, contested regimes into the integrative design of IWRM. This paper is an exploratory study of stakeholder perceptions around China’s Yellow River, which has been hailed as a successful case of IWRM. We find that while water reforms have ostensibly achieved a programme that adheres to the formal discourse of IWRM, subjective perceptions of the stakeholders, as revealed by the Q methodology, still display elements of a localized, fragmented narrative, requiring constant negotiation. Primary elements of the discourse include the following positions: (1) localized, contextual approaches to governance persist; (2) market efficiency and environmental protection are seen as competing goals; and (3) technology creates new gains, but constant negotiation is needed to distribute them fairly. These narratives show that rather than “overturning” old paths, the water reforms created a deliberatory arena in which old and new ideas meld into what we refer to as a “thick” institutional narrative. Our work provides a new perspective on policy change, as well as the persistence of institutional life.

Why Countries Transition? The Case of Brazil, 1964–2016

Economic and political development are contextual. Nevertheless, there are some general elements in the process of institutional persistence and change. We present a framework that goes beyond the standard institutional analysis and adds the concepts of beliefs, leadership, and windows of opportunities in a dynamic process of change. Beliefs of the dominant network may lead countries to choose institutions that do not promote growth and prosperity, even in cases where those in power seek to pursue the common good. Leadership during windows of opportunity helps to determine when, how, and why beliefs change over time. Although each of these concepts alone is not novel in the literature, our major contribution is the evolutionary dynamic. To illustrate the framework, we flesh out the dynamics with a case study of Brazil from 1964 to 2016.

A practice approach to the institutionalization of economic degrowth

The degrowth literature is rich in critical debate about the unsustainability of the growth-economies and in normative envisioning of a transition. It lacks analyses on actual materialization and the nature of the change required. There have been calls for research that pay attention to institutional constraints and possibilities of implementing a democratic process of sustainable degrowth. This paper introduces a practice approach to institutional agency as a fruitful tool for future studies and politics of degrowth. The potential of this approach is demonstrated through a struggle between Finnish Timebanking activists and the tax authorities. The cultural and institutional transition promoted by radical bottom-up initiatives requires a disruption of existing institutional arrangements some of which may be very persistent and supported by defenders who want to maintain the present institutional order. In the case example, the authorities and politicians managed to preserve the mechanisms through which certain sanctions are associated with the non-compliance of Timebanking with the income tax law. A practice approach to institutionalization increases our understanding of institutional persistence and makes visible forces that support the present ‘status quo’. It also enhances understanding of the opposing dynamics and gives tools to engage in more effective efforts to change institutions.

Legislative Malapportionment and Institutional Persistence

This paper argues that legislative malapportionment, denoting a discrepancy between the share of legislative seats and the share of population held by electoral districts, serves as a tool for predemocratic elites to preserve their political power and economic interests after a transition to democracy. We claim that legislative malapportionment enhances the pre-democratic elite’s political influence by overrepresenting areas that are more likely to vote for parties aligned with the elite. This biased political representation survives in equilibrium as long as it helps democratic consolidation. We use data from Latin America to document empirically that malapportionment increases the probability of transitioning to a democracy. Moreover, our data show that overrepresented electoral districts are more likely to vote for parties close to pre-democracy ruling groups. We also find that overrepresented areas have lower levels of political competition and they receive more transfers per capita from the central government, both of which favor the persistence of power of pre-democracy elites.

The impact of sub‐national institutions

AbstractThis paper assesses the effect of sub‐national institutions on the economic performance of Russia's regions (oblasts, republics, krais and okrugs) from 2001 to 2008, a period of rapid economic advancement and recentralization. Approximating sub‐national institutions with the RA Expert index of investment risk, we find that a reduction in investment risk by one standard deviation increases output by 1.4 percent in the short run and 11.9 percent in the long run, suggesting a substantial regional performance gap in government practices, despite intensive political recentralization. Assuming that the main components of effective governance are running satisfactory public health programmes aimed at decreasing overall mortality among the working‐age population, creating fair labour market conditions and improving the regional institutional climate to encourage investment in fixed assets, we argue that sub‐national institutions remain important for growth in post‐Soviet Russia after 2000. This paper contributes to the literature on institutional persistence.

‘The Women's Branch of the Commonwealth Relations Office’: the Society for the Overseas Settlement of British Women and the long life of empire migration

ABSTRACTThis article concerns the Society for the Overseas Settlement of British Women from its formation in 1919 to its closure in 1964 upon the withdrawal of the Treasury grant that provided the bulk of its funding. Describing the imperial network of voluntary organisations and migrants, through which the Society operated, it shows continuity in its activities, geographical remit and personnel from the interwar period despite efforts, especially by the 1960s, to reframe the Society's imperial mission with the rhetoric of Commonwealth and development. It highlights the persistence of imperial institutions and networks after the Second World War.

The Committee on Women's Rights and Gender Equality in the European Parliament: Taking Advantage of Institutional Power Play

The European Parliament's Committee on Women's Rights and Gender Equality (FEMM Committee) is a core actor within the European Union's gender equality policy machinery. Its capacity to act, though, is shaped by the institutional setting within the European Parliament (EP). Using a qualitative approach, this article shows how this particular committee exploits parliamentary rules and routines to maximise its influence. Existing scholarship has suggested that the voluntary nature of its membership implies a weak position within the EP. However, there is evidence to support a contrary interpretation that its voluntary membership assures institutional persistence, thematic inclusion, organisational attention and networked integration.

"The materiality of absence: emptiness, institutions and the incomplete cathedral"

The study contributes to the literature on materiality by investigating the open-ended performativity of absences rather than of physical objects in generating institutional persistence, organizati...

МЕТОДОЛОГІЧНІ ЗАСАДИ ДОСЛІДЖЕННЯ ЕКОНОМІЧНОЇ БЕЗПЕКИ В УКРАЇНІ У СУЧАСНИХ УМОВАХ

Розкрито зростаючий вплив глобалізації та віртуалізації світового економічного простору на сталість економічного розвитку. Виявлено додаткові чинники виникнення загроз економічній безпеці в умовах трансформаційної економіки, пов’язані з кланово-олігархічним характером соціально-економічного розвитку в Україні. Запропоновані деякі заходи щодо нейтралізації ризиків консервації механізмів гальмування формування державі відкритого доступу в Україні.

Through the Eyes of Students

For years, our prevailing view of student retention has been shaped by theories that view student retention through the lens of institutional action and ask what institutions can do to retain their students. Students, however, do not seek to be retained. They seek to persist. The two perspectives, though necessarily related, are not the same. Their interests are different. While the institution’s interest is to increase the proportion of their students who graduate from the institution, the student’s interest is to complete a degree often without regard to the institution in which it is earned. Although there has been much written from the former point of view, much less has been written from the latter. This article seeks to address this imbalance by laying out a conceptual model of student institutional persistence as seen through the eyes of students. Having done so, the article asks what such a model implies about institutional action to promote student persistence.

A House Divided? Examining Persistence for On-Campus STEM and Non-STEM Students

Improving student persistence, especially in science, technology, engineering, and mathematics (STEM) fields, continues to be at the forefront of national educational policy discussions. Living in university housing, with its focus specifically on assisting students in transition, has consistently been positively related to student persistence. Using institutional data and data from a first-year student transition study from all the first-year first-time residential students from Fall 2008 through Fall 2012 ( N = 17,850), this study examined the relationship between student characteristics and experiences and retention for STEM and non-STEM students who live in on-campus housing. Results illustrate that experiences that contribute to retention differ between STEM and non-STEM students. Noncognitive factors related to academic self-efficacy, academic adjustment, and degree aspiration positively affect residential students’ persistence in STEM. Academic performance was a significant factor in institutional persistence for STEM and non-STEM students. Implications for future and practice are discussed.

Political Institutions, Trade Openness, and Economic Growth: New Evidence

ABSTRACTWe present new evidence on the relationship between political institutions, trade openness, and economic growth using a panel of over 200 countries and eight nonoverlapping five-year average observations for 1975–2010. We explore (1) whether political institutions lead to lower economic growth rates and (2) whether income per capita and trade openness curb the persistence of these institutions. The panel data estimation results suggest that most of our political institution proxies do not hinder economic growth. However, increases in per capita income, trade openness, and education curtail the persistence of these political institutions.

Clashing Fashions and Institutions: Mid-Life Uncertainty in Innovation Diffusion

Organizational techniques are labels denoting linguistic prescriptions which organizations can implement to transform organizational inputs into organizational outputs. In Neoinstitutional theory, the theory of fashions in organizational techniques tends to explain the causes of these techniques’ relative transience. By contrast, the theory of institutions in organizational techniques tends to explain the causes of these techniques’ relative persistence. We use both theories of fashions and institutions to examine whether, why, and when over five-hundred organizational techniques persisted relatively permanently or disappeared relatively transiently. We do so by examining how the forces causing fashion transience, institutional persistence, or a combination of both, would affect these techniques’ hazard rate of disappearance; that is, the average risk that organizational techniques disappear, depending on how long they have endured. The article concludes with a tripartite theoretical, methodological, and practical conclusion. It first points to the benefits of using theories of fashions and institutions together. Second, it highlights the advantages of a multi-innovation strategy involving the study of hundreds of diffusing innovations and their hazard rate. Third, it presents the managerial implications, for practitioners, of being capable of estimating the likelihood that a new organizational technique will become either a shorter-lived fashion or a longer-lived institution.

Mutating Neoliberalism: The Promotion of Italian Investors in Slovakia before and after the Global Financial Crisis

In the context of the literature on ‘actually existing neoliberalisms’, this article analyzes the policies and services supporting Italian foreign direct investment (FDI) in Slovakia. It identifies a group of organizations, both Slovak and Italian, which shape and deliver neoliberal pro-FDI policies. By studying such an ‘investment promotion community’ (IPC) before and after the global financial crisis of 2009, and during Italy's prolonged crisis, this article shows both the persistence and adaptability of neoliberal policies and institutions. In so doing, it highlights some of the transnational flows underpinning the ‘domestication’ of neoliberalism in Slovakia. These findings support recent literature arguing that post-crisis neoliberalism can be interpreted as a stunted Polanyian double movement, in which the state has improved some of its regulatory functions but without questioning the overarching neoliberal principles. Specifically, it shows that FDI policies and the support of Italian investors rest upon a professional community that has not changed much since the 2009 crisis. This community played a crucial role in embedding neoliberal rationalities in Slovakia and supports the persistence of this ideology in the post-crisis environment.