Institutional Quality Research Articles

Exploring the impact of fintech, human capital, mineral policy, and institutional quality on poverty traps: Evidence from resource-dependent economies

In 80 developing countries from 2005 to 2021, this analysis analyzes how institutional quality, human capital, mineral policy, and Fintech affect poverty traps. We analyze panel data using MMQR to discover subtle relationships. The findings of our study demonstrate that poverty traps are negatively impacted by human capital and institutional quality, highlighting the significance of these factors in terms of economic resilience. On the other hand, natural resources and economic expansion benefit all quantiles, with the most significant impact appearing in lower to medium quantiles due to the influence of agricultural activities and mineral resources. The influence of Financial Technologies (Fintech) on poverty traps abroad is negligible. Based on these findings, specific policies are necessary to enhance human capital, improve legal systems, and ensure sustainable resource extraction and agriculture. To decrease poverty traps and promote sustainable development, the quantitative findings of this study provide policymakers and governments with assistance in formulating measures.

Why do some populist presidents erode liberal democratic institutions more than others in Latin America?

ABSTRACT This paper contributes to the current literature on the relationship between populist rule and liberal democracy by conducting quantitative research with a time-series cross-sectional dataset covering 18 Latin American countries from 1991 to 2017. The findings reveal an overall negative correlation between populist rule and the quality of liberal democratic institutions, highlighting their inherent incompatibility. Nevertheless, this paper argues that several factors influence the governing populists' ability to erode liberal democracy. Specifically, it is observed that the negative impact of populist rule on the quality of liberal democratic institutions is amplified in the presence of higher levels of natural resource rents and lower levels of industrial employment and financial development. Moreover, it is found that the impact of these moderating variables on the relationship between populist rule and liberal democracy is contingent upon the ideological orientation of governing populists.

African continental free trade area and greenfield investment: Likely effect and transmission channels

AbstractWe examine the likely effect of the African Continental Free Trade Area (AfCFTA) on African investment using data on announced greenfield investment. Departing from existing work on this subject, we add value by providing estimates based on a general equilibrium counterfactual analysis in a structural gravity framework. Results suggest that the stock of announced intra‐African greenfield investment in 2018 would have increased by 0.7 percent from a successful implementation of the AfCFTA in that year relative to the baseline scenario of no agreement, with considerable heterogeneity across source and destination countries. Moreover, the positive effect is found to increase with the depth of the negotiated agreement. Exploring possible transmission channels we find the trade elasticity of announced greenfield investment to be positive, especially for trade in intermediates in African host countries with strong governance indicators. This suggests that, by improving institutional quality and galvanising regional value chains, integration within Africa could also incentivise investment.

Greening the BRICS: How Green Innovation Mitigates Ecological Footprints in Energy-Hungry Economies

The escalating energy consumption seen in the BRICS countries, namely Brazil, Russia, India, China, and South Africa, presents a substantial environmental problem, resulting in the depletion of resources, amplified carbon emissions, and endangering the well-being of ecological systems. The study examines the potential of green innovation to alleviate these adverse effects. By combining green technology with strong institutions and responsible energy consumption, we argue that the BRICS nations can significantly reduce their ecological footprint. This research, encompassing data from 1995 to 2022, employs Driscoll–Kraay and panel quantile regression to analyze the complex interplay of institutional quality, energy consumption, green innovation, and ecological footprints across the BRICS countries. Our findings reveal that green innovation is crucial in mitigating the ecological footprint, particularly when combined with resilient institutional quality and controlled energy use. Conversely, factors like high energy consumption, natural resource rent, and urbanization contribute to an increased ecological footprint. Notably, the study emphasizes the critical role of both institutional quality and renewable energy consumption in effectively reducing the ecological burden within the BRICS nations. These findings suggest that prioritizing investments in green technology and institutional development, even amidst high energy demands, represents a viable strategy for the BRICS nations to achieve sustainable growth and environmental responsibility.

Do institutions matter for citizens' health status? Empirical evidence from Italy.

This paper investigates the role of institutional quality in explaining cross-regional variation in population health status in Italy. We first introduce a composite Regional Health Status Indicator summarizing life expectancy, mortality and morbidity data. Then, we study the empirical relationship between this indicator and a set of socioeconomic, health system and institutional controls at the Italian regional level over the period of 2011-2019. We find that institutional quality is a driver of population health. Furthermore, well-functioning local institutions and regions compliant with national standards in terms of public healthcare services (Essential Levels of Care) make socioeconomic context no longer relevant for population health, potentially reducing inequalities.

Rentierism—Political Instability Nexus: The Danger of Oil-producing Region Crisis in Nigeria

The growing popularity of the rentier state theory has made the focus on the impact of oil rents on political stability central for revealing how natural resource (including oil) windfalls link to the weakness of institutional quality in any resource-rich economy. Considering the core characteristic of a rentier state (such as Nigeria)—a distributive political economy—the article examines how the stability of Nigerian political system can be affected by oil rents over the period 1996–2021. Through the adoption of autoregressive distributed lag (ARDL) bounds test to cointegration and vector error correction mechanism (VECM) for the test of long-run causality, the apparent effect of oil rents on Nigerian political development is reflected in the analyses and findings. Empirical evidence supports the oil impedes political stability assertion, as there is statistically valid negative association between oil rents and political stability in the short run and long run. It is demonstrated that oil wealth could offer greater incentives for civil conflicts, which have resulted in escalating political problems. In addition, the causality mechanism implies that the relationship found merely indicates association between oil rents and the level of political stability in the long term, and it is not causal. Thus, it is posited that through the adoption and implementation of sound policy measures, the escalation of conflicts would likely subside, especially in most oil-rich regions or states, whereas civil order could be promoted. It is, therefore, critical to enhancing fairness in the use and distribution of oil wealth, improving people’s welfare, particularly in the oil-producing communities and in general, ensuring that democratic principles in the management of resource windfalls are sustained. JEL: Q33, Q34, H56, H12

The crucial roles of ICT, renewable energy sources, industrialization, and institutional quality in achieving environmental sustainability in BRICS.

The BRICS countries-Brazil, Russia, India, China, and South Africa-are committed to achieving United Nations Sustainable Development Goal 13, which focuses on mitigating climate change. To attain this goal, it is crucial to emphasize the significance of ICT, renewable energy sources, industrialization, and institutional quality. This study contributes to the literature by examining the potential role of these factors in environmental sustainability in the BRICS economies from 2000 to 2021, utilizing cross-sectional augmented autoregressive distributed lag (CS-ARDL) estimation and other novel econometric techniques. Accordingly, the study suggests that BRICS governments and policymakers prioritize the use of ICT in the industrial and institutional sectors to achieve faster environmental sustainability in the short-run, as per the CS-ARDL results. However, the study advises caution in the long-term as the interaction between ICT and renewable energy sources, industrialization, and institutional quality may not favour environmental quality. Although the renewable energy sources interaction with ICT may not yield immediate progress, strong measures need to be taken to ensure that short-term gains are not nullified. In conclusion, the study highlights the potential of ICT, renewable energy sources, industrialization, and institutional quality in achieving environmental sustainability in the BRICS countries, while recommending cautious measures in the long run to safeguard the progress made.

Pedagogical Innovation with Sense? A Seminal Experiment of Service-Learning in Gerontological Social Work

Higher education institutions have been investing in teachers’ professional development and pedagogical innovation, on the one hand, aiming to promote the quality of institutions and, on the other hand, aiming to promote students’ personal and academic development. One of the methodologies that has received particular attention is service-learning, which aims to promote students’ learning by providing a service to vulnerable community groups. In this study, we aim to present the results of the application of this methodology in a fourth-year social work course. To this end, a mixed-methods study was conducted with 10 students in the Contemporary Social Work III course using the service-learning methodology. Students experienced between 15 and 30 h of service-learning, most of them for 7 weeks or more in an elder care institution, with varied activities such as social consulting and home visits. When we tried to understand the students’ perceived impact, we found higher mean scores in the post-test, with statistically significant differences on several dimensions, particularly self-confidence, problem solving, adaptability and flexibility, dealing with diversity and multiculturalism, understanding complex social issues, and a sense of purpose and life. These data are aligned with the qualitative analysis, which identified six themes such as the integration of practice and theory, development of skills, positive impact on academic training, valuing practical experience, reflective and meaningful learning, and support and guidance. The results highlight the value of pedagogical innovation for students’ skills, especially when it is aligned with the identity and mission of the institution and the values of the study program.

Technological innovation and energy efficiency in central Eastern European countries

This study examines the causal relationship between technological innovation and energy efficiency in Central and Eastern European countries. The results indicate that technological innovation significantly impacts energy efficiency in the Czech Republic, Latvia, Lithuania, Slovakia, and Slovenia through various economic and political factors. Conversely, energy efficiency also significantly affects technological innovation in Estonia, Hungary, and Slovakia. These findings suggest that energy efficiency is a function of the rate of innovation adoption. It is recommended that these countries prioritize implementing reforms that bolster economic freedom and institutional quality to foster innovation.

Burden, causes, and risk factors of perinatal mortality in Eastern Africa: a protocol for systematic review and meta-analysis

Background Although global mortality rates in children under 5 years have decreased substantially in the last 30 years, there remain around 2.6 million stillbirths and 2.9 million neonatal deaths each year. The majority of these deaths occur in Africa and South Asia. To reduce perinatal deaths in East Africa, knowledge of the burden, but also the risk factors and causes of perinatal deaths are crucial. To the best of our knowledge, reviews have previously focused on the burden of perinatal deaths; here we aim to synthesize evidence on the burden, causes, and risk factors for perinatal mortality in East Africa. Methods We will conduct a systematic literature search in Medline, Web of Science, EMBASE, Global Health, SCOPUS, Cochrane Library, CINAHL, HINARI, African Index Medicus, African Journals Online (AJOL), and WHO African Regional Office (AFRO) Library. The study population includes all fetuses and newborns from ≥22 weeks of gestation (birth weight ≥500gm) to 7 days after birth, with reported causes or/and determinants as exposure, and perinatal mortality (stillbirths and/or early neonatal deaths) as an outcome. We will include studies from 2010 to 2022, and to facilitate the inclusion of up-to-date data, we will request recent data from ongoing surveillance in the region. To assess the quality of included studies, we will use the Joanna Briggs Institute quality assessment tool for observational and trial studies. We will analyze the data using STATA version 17 statistical software and assess heterogeneity and publication bias by Higgins’ I2 and funnel plot, respectively. Conclusions This systematic review will search for published studies, and seek unpublished data, on the burden, causes, and risk factors of perinatal mortality in East Africa. Findings will be reported, and gaps in the evidence base identified, with recommendations, with the ultimate aim of reducing perinatal deaths. Protocol registration PROSPERO-CRD42021291719.

Tax revenue mobilization and institutional quality in sub‐Saharan Africa: An empirical investigation

AbstractThis paper investigates the effects of institutional quality on tax revenue collection in sub‐Saharan African countries. We include the six institutional quality indicators (i.e., voice and accountability, political stability, regulatory quality, rule of law, control of corruption, and government effectiveness) as explanatory factors for tax revenues and its components in a sample of 42 countries over the period 1996–2019. A system GMM approach was used for the estimations. Consistent with previous results, we find that institutional quality has positive and significant effects on tax revenue collection in sub‐Saharan Africa. Specifically, aggregate total tax revenues, direct taxes, income taxes, and goods and services taxes are positively affected by the six institutional quality indicators. Indirect taxes are positively associated with four indicators, with the exception of government effectiveness and political stability, while tax on international trade are affected by institutional quality factors, with the exception of control of corruption and voice and accountability. These findings indicate that sub‐Saharan African countries should improve institutional quality to boost tax revenue collection.

Institutional framework, macroeconomic instability and financial markets: perspective from emerging economies

Purpose The study evaluates the role of institutional framework and macroeconomic instability on financial market development among emerging economies.Design/methodology/approach The study uses panel data compiled from 32 countries from the sub-region of Sub-Sahara Africa (SSA), covering the period starting from 1996 to 2019. Empirical analyses were carried out using the two-step system generalized method of moments (TS-GMM) statistical framework.Findings Reviewed results suggest that institutional quality, effective governance and corruption control have a significant positive impact on financial market development among economies in the sub-region. Further empirical estimates show that macroeconomic risk and macroeconomic uncertainty have significant adverse effects on financial market development. Additionally, reported empirical estimates suggest that an improved institutional framework has the potential to lessen the adverse effect of macroeconomic instability on financial market development among economies in the sub-region.Originality/value The uniqueness of this empirical inquiry compared to related studies in the present literature stems from the fact that studies employing similar empirical approaches on the subject matter for economies in the sub-region are rare. Additionally, the analysis pursued in this study employs critical variables whose impact on financial market performance in the sub-region has not been examined per our review. These variables include indexes such as macroeconomic risk and institutional quality, which are unique to this study based on their construction; these indexes are generated using a principal component analysis procedure with different underlying variables compared to what may be found in the literature.

Crude credit: The political economy of natural resource booms and sovereign debt management

Oil, gas, and minerals have notoriously adverse effects on institutional quality. But when global liquidity is high, risk-tolerant investors are more willing to lend to all borrowers, even resource-rich countries with low-quality institutions. Despite the availability of cheaper credit during commodity booms, we argue that countries do not increase current borrowing to mitigate future revenue shortfalls during commodity busts. Instead, they rely on resource windfalls to meet their current financing needs, fearing they would otherwise forfeit national policy discretion to global financial markets. We leverage primary evidence from extensive field research across five Latin American countries to show that national economic officials (i.e. finance ministers and central bank governors) are wary of high indebtedness, after past commodity booms ended in cycles of lofty spending, borrowing, and default. For sovereign borrowers, high bond market indebtedness often reduces government discretion over economic policy, whereas windfalls increase it; all else equal, governments will favor the latter. Using data on 22 Latin American and Caribbean countries from 1996 to 2020, we find that governments issue bonds less frequently, in smaller amounts, as their oil and gas production or GDP share from resource rents increases. These findings make an important contribution to our understanding of how commodity cycles affect global capital markets: sovereign borrowers do not fully leverage commodity booms to expand their fiscal space to finance more spending over time.

Determinants of public-private partnership governance structures: evidence from India

ABSTRACT Public-private partnerships (PPPs) represent a continuum of governance structures characterized by wide variability in private sector risk transfer. Despite the widespread adoption of PPPs, few studies examine the reasons for such heterogeneity. We investigate the factors explaining variability across PPP governance structures and their impact on the extent of private sector risk transfer using ordinal logistic regression on a novel dataset of 2330 Indian PPP projects. We find that the risk transfer is mainly driven by economic and fiscal factors, service-specific transaction costs and project-specific factors, while political factors and institutional quality barely influence it.

Public sector and human capital: on the mechanics of economic development

AbstractThis paper proposes a theory about the allocation of human capital along the development process that helps to understand the controversial impact of this variable in growth regressions. We build a model in which human capital is allocated to three activities: production, tax collection (bureaucracy), and public education. At the first stage of development, countries have low effective tax rates because tax collection requires human capital, which is scarce. As countries accumulate human capital throughout the transition, the effective tax rate rises, diverting human capital from production to bureaucracy and public education. Consequently, at this stage, human capital has a weak impact on production, even when the human capital allocation is efficient. Furthermore, disparities in institutional quality may diminish the correlation between human capital and GDP.

Unraveling the Environmental Consequences of Trade Openness in South Africa: A Novel Approach Using ARDL Modeling

Abstract Free trade and environmental sustainability are currently top economic and environmental research priorities. While numerous theories connect trade openness with environmental quality, empirical evidence often fails to support these claims. Using data spanning from 1980 to 2020, our study examines the effect of trade openness on CO2 emissions in South Africa. By employing a novel ARDL modeling framework, our analysis confirms the presence of the Environmental Kuznets Curve (EKC) hypothesis in South Africa. Our findings reveal that while GDP square enhances environmental quality, trade openness and economic growth have a degrading effect over time. Additionally, the study identifies that energy consumption, FDI, and value-added activities all contribute to environmental degradation. Findings also highlights the influence of institutional quality on the environment, demonstrating that political stability and control of corruption lead to increased CO2 emissions, while the rule of law reduces CO2 emissions. The research suggested that the potential of green economies should be leveraged in developing renewable energy, sustainable development, the recycling industry, and green financing sectors. A shift in economic activity in this direction will thus foster long-term economic growth and sustainable development.

The influence of institutional quality, economic freedom, and technological development on Islamic financial development in OIC countries

This study investigates the relationship between Institutional quality, Economic freedom, technological advancement, and Islamic financial development in selected OIC countries. This study employs the panel estimation method to examine annual data pertaining to Islamic bank industries across 22 countries, sourced from the SESRIC database, from 2013 to 2021. The findings show that the overall quality of institutions and economic freedom influence Islamic finance development. Further, the contribution of technological development appears when institutional quality indicates higher performance. Despite the predominant correlation observed among institutional indicators, this study, focusing on a comprehensive index, reveals a consistent and significant contribution of institutional quality to the growth of Islamic finance. Furthermore, this study's findings show that institutional quality and economic freedom are related; yet, the methods by which the foundations of each indicator influence financial development differ. The findings of this research underscore the importance of urging policymakers, particularly governmental authorities, to prioritize the development of policies and initiatives aimed at fostering a healthy and conducive environment. Emphasizing practical and transparent institutional frameworks is essential for cultivating a well-regulated economic environment.

THE FINANCIAL DEVELOPMENT, INSTITUTIONS, AND POVERTY REDUCTION: EMPIRICAL EVIDENCE FROM SOUTH ASIAN COUNTRIES

Fighting poverty is one of the most critical targets of development plans and initiatives. In the pursuit of lasting growth, emerging nations now face the most challenging issue of eliminating poverty, which remains one of the most significant challenges addressing humanity nowadays. The study explores the relationships between the institutional quality, financial development, and poverty-fighting initiatives of South Asian states. It goes beyond the potential bias in earlier studies caused by omitting variables by considering the impact of the interaction between the financial sector and institutional framework. The fixed effects models with STATA15 are employed in this study from 2000 to 2019. This study's analysis uses panel data and secondary sources to conduct the inquiry with a sample of 7 South Asian economies such as Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. This comprehensive compilation of annual data was done with consultation from the International Monetary Fund (IMF) and the World Bank Development Indicators (WDI). The study results show that a 1% increase in financial development is associated with a 39.88% decrease in poverty, which is statistically significant and favourable. It also reveals that institutional quality plays a vital role in poverty reduction in South Asia, with a 1% increase in institutional quality leading to a 2.61% increase in poverty. Besides, a 1% increase in GDP per capita growth correlates with a 0.12% decrease in poverty. The study's findings provide significant insights into poverty reduction by considering the relationship between institutional challenges and financial development through a flexible, functional structure in South Asian countries.

Governance, institutions, and climate change resilience in Sub-Saharan Africa: assessing the threshold effects

The concerns about institutional weakness in Sub-Saharan Africa (SSA) are central to the discussion on environmental degradation in the region. This study employs a robust dynamic panel data estimator to explore the relationships between institutions, governance, and environmental quality, focusing on the ecological footprint of 25 SSA nations from 1990 to 2020. The results reveal the threshold effects of the interaction between institutions and governance, following an inverted U-shape pattern. This suggests that beyond a certain ecological footprint, increased interaction between institutions and governance leads to a decrease in ecological footprint. Additionally, high institutional quality (IQ) is associated with a lower environmental impact, while improved governance contributes to mitigating the decline in institutional performance. The panel causality tests among the variables and control components indicate a one-way causal relationship from ecological footprint to governance, infrastructural development, and energy use. Conversely, a feedback causal relationship exists between IQ, industrialization, and ecological footprints. Policymakers should prioritize investments in energy consumption that align with environmental quality, ensuring efficient use of energy budgets through coordinated planning, execution, and transfer of sound energy practices to prevent duplication of efforts.

Good governance in troubled times: What we know and what experts say

While mankind has been subject to disasters since the beginning of civilization, economic development has brought about new types of crises like economic and financial crises and pandemics. Not all crises are the same, and neither are their effects. This paper provides a comprehensive review of the literature, discussing the asymmetric effects of various crises focusing on the role of governance and institutions. Specifically, we discuss the role of institutions in predicting crises and dealing with them, and how crises shape citizens’ trust in and the quality of institutions. Besides individual contributions to the special issue on the topic which are also summarized here, we provide insightful expert comments from scholars like Nejat Anbarci, Kaushik Basu, Utteeyo Dasgupta, Justin Esary, Robert Gillanders, Ajit Mishra, and Shang-Jin Wei on these topics. This piece is intended for scholars as well as practitioners and policymakers working in the area.