Institutional Persistence Research Articles

Local institutions on small firm investments: degrees of institutional persistence matter

This study investigates the influence of local institutions including corruption, administration transparency, and leadership proactivity on small firm investment. Drawing from the institutional theory, we suggest that the persistence (resistance to changes) of institutional forces is an important determinant of their effects on investment. Using a dataset of 945,725 firm observations in Vietnam from 2006 to 2015, we find that: 1) investment is a U-shaped function of corruption controls; 2) transparency has a positive effect on investment; 3) leadership proactivity can moderate the adverse effects of corruption and opaqueness in public services. This variety in the association patterns between investment and institutional forces is due to the degree of institutional persistence in local norms of doing business.

Institutional drivers, historical determinism, and economic development in Mozambique

PurposeThe purpose of this paper is to examine the evolution of political and economic institutions, their persistence and interdependence and their effects on economic progress in Mozambique.Design/methodology/approachUsing a unique data set, which has developed detailed long-run indices of institutional change in Mozambique from 1900 onwards, the research utilizes time-series econometrics to estimate cointegration relations and Vector Autoregressive and Vector Error Correction models, and also Granger causality, correlation and residual analysis when interpreting the estimation results.FindingsIt shows support for path dependence in political and economic institutions as well as the critical juncture theory and modernization hypothesis, and for webs of association between these institutions and economic development. It provides evidence of an equilibrium-dependent process, where history does matter (as do early conditions), and whose impact may differ depending on the nature of institutional arrangements. Various institutions created during colonial times have a bearing on the present state of institutions in Mozambique, as reflected in important continuities regarding the forms of political economy, among others.Originality/valueThe work contributes to existing research not only through the employment of a new set of institutional measures, which allows for a particularly long time-series investigation in a developing country setting, but also through its contribution to studies on modernization and critical junctures but in a longitudinal manner which allows for the exploration of complex dynamics embedded within a country’s particular political economy. The implications are far-reaching and carry importance beyond the academy given the pressure on policymakers to get things right because of the persistence of institutions and their consequences and the associated path dependency.

The Successes and Failures of Economic Reform in Nigeria’s Post-Military Political Settlement

ABSTRACT There are limitations in the explanatory power of prevailing theories on the political economy of Africa’s growth without industrialization that emphasize the resource-curse, ethnicity, neopatrimonialism, and the developmental state. This article uses a political settlements approach to explain the institutional underpinnings of Nigeria’s economic transition. It shows how external constraints on ruling elites interact with the distribution of power and institutions to stimulate episodic reforms in an ‘intermediate’ Nigerian state. Rather than a ‘developmental’ state presiding over industrial upgrading or a ‘predatory’ state operating solely on neopatrimonial basis, this intermediate state presides over selective reforms and bursts of economic growth and diversification. Thus, specific constraints in Nigeria’s post-military political settlement from 1999 generated the initial impetus for successful telecoms liberalization, while inhibiting growth in the oil sector. This article contributes to advancing the political settlements framework in applying it to resource-rich countries, by outlining the four dimensions of the distribution of power and the constraints for institutional persistence or change, and their varying economic implications. It also reclaims the concept of ‘elite bargains’ as a defining feature of the horizontal distribution of power and demonstrates its centrality to the durability or fragility of institutions, especially at critical junctures of resource booms and busts.

Local institutions on small firm investments: degrees of institutional persistence matter

This study investigates the influence of local institutions including corruption, administration transparency, and leadership proactivity on small firm investment. Drawing from the institutional theory, we suggest that the persistence (resistance to changes) of institutional forces is an important determinant of their effects on investment. Using a dataset of 945,725 firm observations in Vietnam from 2006 to 2015, we find that: 1) investment is a U-shaped function of corruption controls; 2) transparency has a positive effect on investment; 3) leadership proactivity can moderate the adverse effects of corruption and opaqueness in public services. This variety in the association patterns between investment and institutional forces is due to the degree of institutional persistence in local norms of doing business.

Migration, forest management and traditional institutions: Acceptance of and resistance to community forestry models in Nepal

Although studies on Community Forestry (CF) have been focused on what makes a CF model sustainable and how it can achieve success, CF lacks study on why a community accepts or resists a model. This study explores the reason why some CF models are accepted and others are resisted by communities by studying two different types of CF model in Nepal – Community Forestry User Groups and Conservation Area Management Committees. Based on household surveys, semi-structured interviews and historical analysis, such variations in local acceptance have been examined on the basis of the following three hypotheses: the variation in local acceptance is due to increasing out-migration and the subsequent decreasing use of community-managed forests for livelihoods, the variation is due to the management arrangements of the CF models themselves, and the variation is due to the persistence of traditional practices of forest use. The article ultimately finds that an acceptance of or resistance to a CF model cannot be explained solely by relying on the migration of users and their decreasing dependency on the forests. Rather, in addition to reducing active leadership, out-migration prevents local participation in the design and implementation of new forestry institutions, and therefore makes an institution vulnerable and increases the risk of accepting a CF model. Moreover, a CF model that has wider institutional flexibility in terms of rules and rights can succeed in incorporating villagers’ priorities, and can thus enjoy enhanced local acceptance. Finally, the persistence of traditional institutions with the ability to impose sanctions on forest uses can resist to a formally designed CF model. As the government of Nepal is revising forestry legislation in the context of climate change and REDD+, the findings may provide knowledge for the sustainability of emerging forestry governance practices.

Análise das audiências de custódia realizadas no estado do Rio Grande do Norte, na Comarca de Natal

O presente artigo tem por objetivo geral descrever sistematicamente as audiências de custódia ocorridas no Tribunal de Justiça do Estado do Rio Grande do Norte (TJRN), na comarca de Natal. Para tanto, avaliou-se o impacto de tal procedimento no cotidiano do Judiciário, descrevendo as audiências, tanto em sua estrutura geral, como os rituais específicos de interação entre custodiados e operadores do direito – juízes, promotores e defensores. Na descrição das audiências, incluem-se seus atores e suas situações recorrentes e excepcionais, buscando-se ainda analisar as práticas dos agentes ligados ao poder público. Tal avaliação tem por base uma observação sistemática de práticas e procedimentos que envolvem as audiências de custódia realizadas no TJRN. Em termos de estrutura geral, as observações apontaram a coexistência de uma dimensão formal e de outra informal das audiências. Enquanto na estrutura formal o protagonismo cabe ao juiz, seguido pelo promotor, tomando decisões a partir das prescrições do direito processual penal; a estrutura informal apresenta padrões persistentes de sujeição criminal, motivações pessoais e supervalorização do trabalho policial de produção de flagrantes. De forma geral, aponta-se a persistência institucional de padrões de seletividade penal.

Weak economic institutions in Africa: a destiny or design?

PurposeThe primacy of institutions for economic progress has been established in the literature. Yet, less research attention is paid to the existence and persistence of weak economic institutions in Africa. Thus, the purpose of this paper is to empirically explore the determinants of the quality of economic institutions in Africa.Design/methodology/approachHausman–Taylor instrumental variable estimator of panel regression was employed for a sample of 43 Sub-Sahara African countries over the period 1995–2017.FindingsThe study finds that the existence and persistence of weak economic institutions in Africa is more of design than destiny. That is, weak economic institutions are created and sustained more by bad political institutions rather than cultural diversity and geographical factors. Therefore, strong political institutions need to be entrenched to reverse the equilibrium of weak economic institutions and dismal economic performance in the continent.Practical implicationsThe study provides deep understanding of the determinants of economic institutions. This is imperative for policy makers, development agencies and stakeholders in designing viable economic policies and programs for the continent.Originality/valueThe novelty of the study is rooted in the examination of the factors responsible for the development and persistence of weak economic institutions in Africa. The idea is original because previous studies focus on political institutions and neglected economic institutions.

Measuring and explaining formal institutional persistence in French West Africa

AbstractColonial institutions are thought to be highly persistent, but measuring that persistence is difficult. Using a text analysis method that allows us to measure similarity between bodies of text, we examine the extent to which one formal institution – the penal code – has retained colonial language in seven West African countries. We find that the contemporary penal codes of most countries retain little colonial language. Additionally, we find that it is not meaningful to speak of institutional divergence across the unit of French West Africa, as there is wide variation in the legislative post-coloniality of individual countries. We present preliminary analyses explaining this variation and show that the amount of time that a colony spent under colonisation correlates with more persistent colonial institutions.

Institutional persistence, income inequality, and individual attitudes

Aspects of institutional quality vary substantially across countries, but are quite persistent over time. Further, institutional quality is correlated with income inequality, even among democracies. To account for these regularities, we offer a model where individual attitudes, toward inequality or trust in government, feature in voters’ preferences. The model displays path dependence, whereby inequality and institutional quality feed each other. It is suggested that this may explain the long shadow of historical legacies of postcolonial experiences. Simple correlations of reported attitudes using data from the World Values Surveys are consistent with the model.

Planning reform and development rights in Greece: institutional persistence and elite rule in the face of the crisis

ABSTRACTThis paper discusses the process of development rights allocation in Greece and the changes to that process which occurred from 2009 onward. It argues that the interaction of institutions which regulate the allocation of development rights, with social practices of formal and informal land development, gives rise to development pathways which demonstrate institutional persistence. In the case of Greece, these pathways range from ‘urban development by state organisations’, to development without planning permission on land that is not owned by the developer. The crisis was a shock to the Greek governance system, yet the analysis in this paper shows that the reforms of the development rights allocation process followed the pre-existing ‘mentality of rule’. The paper therefore argues that development pathways reflect a political arrangement between the ruling elites and other social strata. The technologies of governance and the associated institutions and practices which support elite rule, were sustained, if not reinforced, during the crisis. This analytical approach therefore offers insights of relevance to other countries in Europe and around the world which contemplate reforms to their development rights allocation system.

How history matters: The emergence and persistence of structural conflict between academic and vocational education: The case of post-Soviet Estonia

The article deals with the structural conflict between academic and vocational postcompulsory secondary education involving the negative selection to vocational education. The conflict is treated from the historical perspective with the aim of explaining historical factors and social mechanisms that have contributed to the persistence of the conflict to the present day. The theoretical framework combines neoinstitutionalism and historical sociology. We argue that the historical developmental path of the education system has played a significant role in the emergence of the above-mentioned structural conflict, and the principal mechanism of institutional persistence lies with cultural-cognitive institutions. As a result of systematic historical path analysis, we can conclude that Khrushchev’s educational reform in the 1960s instigated a pattern of negative selection to vocational education that has persisted despite radical societal changes related to the post-Soviet transition. However, not only historically evolved understandings but also the interactions between them and actual labour market outcomes of vocational education seem to function as the main reinforcing mechanisms.

Exploring factors influencing on students’ intention on institutional persistence

Exploring factors influencing on students’ intention on institutional persistence

Lost in Transition? The Persistence of Dictatorship Mayors

We look at Chile’s transition to democracy in 1990 to study the persistence of authoritarian politics at the local level. Using new data on the universe of mayors appointed by the Pinochet dictatorship (1973-1990), and leveraging on the arbitrary election rules that characterized the first local election in 1992, we present two main findings. First, dictatorship mayors obtained a vote premium that is larger among the last wave of incumbents and appears partially explained by an increase in local spending. Second, dictatorship mayors who were democratically elected in 1992 brought votes for the parties that collaborated with the dictatorship in subsequent elections held in democracy. These results show that the body of politicians appointed by a dictatorship can contribute to the persistence of elites and institutions.

Historical shocks and persistence of economic activity: evidence on self-employment from a unique natural experiment

ABSTRACT This paper investigates the persistence of self-employment in the districts of Kaliningrad, a Russian exclave, between 1925 and 2010. The area experienced a number of disruptive historical shocks during this period. This setting rules out the fact that the persistence of self-employment can be explained by the persistence of institutions and culture. Nevertheless, a high level of persistence of industry-specific self-employment rates is found. It is argued that a historical tradition of entrepreneurship created an awareness about the entrepreneurial potential of regions among the new population that was yielded after the collapse of the Soviet Union. This effect seems to be higher in regions where a specific industry was advanced in terms of technology use.

Long-term effects of access to health care: Medical missions in colonial India

Health outcomes in India vary substantially across regions. Motivated by mounting evidence of the historical persistence of institutions and behavior, this paper studies the historical origins of this health variation. We examine the long-term consequences of the Protestant medical missionary enterprise that spread throughout India in the nineteenth century. Protestant mission medicine sought to place itself within non-European social and institutional milieus, contributing to the diffusion of Western medicine among the local population. We construct a novel fully geocoded dataset that combines contemporary individual-level data with historical information on missionary activities. We document a robust positive association between proximity to a Protestant medical mission and current individuals' health outcomes. Our analysis indicates that this long-run link is not driven by religious conversion or persistence of infrastructure, but possibly by improvements in individuals' health potential and changes in hygiene and health habits.

Pīrs and Politics in Punjab, 1937–2013

AbstractThis article provides a first systematic mapping of politically influential shrines across Pakistani Punjab by identifying shrine-related families that have directly participated in elections since 1937. One of the earliest entrants in the politics of pre-partition Punjab, shrine elites (pīrs) have shown remarkable persistence in electoral politics post independence. We find striking long-run continuities in the initial configuration of religion, land, and politics fostered during colonial rule and embodied in political shrines. Exploring possible mechanisms of this persistence, we emphasize the role of shifting political alliances, repeated military interventions, marital ties among shrine elites, and preservation of political brokerage. Defined by their privileged ‘origins and associations’ and organized as a group with a strong sense of solidarity around protecting common interests, the pīrs are a key component of Punjab's power elite, the study of which is central to understanding the genesis and persistence of elites and institutions.

Persistence and Change in Culture and Institutions under Autarchy, Trade, and Factor Mobility

Differences among nations in culture (preferences including social norms) and institutions (contracts) may result in specialization and gains from trade even in the absence of exogenous differences in factor endowments or technologies. Goods differ in the kinds of contracts that are appropriate for their production, and so strategic complementarities between contracts and social norms may result in a multiplicity of cultural-institutional equilibria. The resulting country differences in culture and institutions provide the basis for comparative advantage. In our evolutionary model of endogenous preferences and institutions, transitions among persistent cultural-institutional configurations occur as a result of decentralized and uncoordinated contractual or behavioral innovations by employers or employees. We show that the gains from trade raise the cost of deviations from the prevailing culture and institutions. As a result, trade liberalization impedes decentralized transitions, even to Pareto-improving cultural-institutional configurations. International factor mobility has the opposite effect. (JEL D02, D86, F11, F21, J41, O43, Z13)

Money and its institutional substitutes: the role of exchange institutions in human cooperation

AbstractThis paper offers an increasing returns model of the evolution of exchange institutions building on Smith's dictum that ‘the division of labor is limited by the extent of the market’. Exchange institutions are characterized by a tradeoff between fixed and marginal costs: the effort necessary to execute an exchange may be economized by up-front ‘investment’ in strategies to facilitate the publication and accounting of trading histories. Increases in the size of the exchange network select for higher-fixed-cost exchange institutions, beginning with autarky, through various intermediate stages, and finally to mass monetary exchange. By identifying the relevant fixed costs of money and its institutional substitutes across time, the paper both accounts for the persistence of pre-monetary exchange institutions, despite the ‘inevitability’ of monetary exchange that seems to be a feature of traditional models of the origin of money, and illuminates the forces driving the transition from one to another.

Contemporary China Studies in Japan: mainstream approaches and challenges

ABSTRACTContemporary China Studies in Japan owes its origin to two different sources. One is the prewar Japanese sinology (Toyogaku), at that time the main source of scientific knowledge on China. Although its influence waned after the war, its relevance cannot be underestimated. The other is Area Studies, a discipline first developed in the United States after the World War II. In the last 50 years, Contemporary China Studies in Japan has yielded great advances in the subfields of Chinese economy, politics, modern and contemporary history, and cultural anthropology, to name but a few. Following China’s rapid economic transformation and its rise to great power status, Contemporary China Studies is currently undergoing a massive paradigm shift, thus facing significant challenges that need to be addressed. In author’s opinion, the biggest challenges can be grouped under three headings: 1) the trinary structure model of state–society relations, 2) the Asianization of Contemporary China Studies, and 3) the persistence of institutions. The aforementioned fundamental challenges are dealt with in detail in the main section of this study; while in the conclusion, the concept of “state capitalism” and the very nature of Chinese state are discussed.

“Traditional” Resolution of Land Conflicts: The Survival of Precolonial Dispute Settlement in Burundi

Where and how have precolonial institutions of conflict resolution remained intact? Although it is often argued that “traditional” institutions can play a key role in managing communal conflicts, little is known about the conditions of their “survival.” This article argues that historical, political, and cultural topographies are essential to understanding patterns of the persistence and demise of precolonial institutions. Traditional modes of conflict resolution remain strong where they have been internalized over centuries: in the cultural and political centers of precolonial states. I use original geocoded survey data and historical spatial information on precolonial Burundi to analyze this hypothesis. The estimations yield robust correlations between the geographic patterns of the precolonial kingdom and current modes of resource-related conflict resolution.