New Institutional Economics Theory Research Articles

The Gene of the Digital Economy

At present, blockchain technology has great application value and broad application prospect in various economic fields. This paper analyzes the impact of blockchain technology on economic efficiency by reviewing the basic concepts, working principles and main features of blockchain technology and applying the theory of new institutional economics, and finds that the application of blockchain technology can effectively reduce transaction costs, promote self-execution of transaction contracts and solve the problem of information asymmetry, which can greatly improve the efficiency of the economy. Finally, policy suggestions are proposed to deepen the exploration and research of blockchain technology, strengthen the integration and development of blockchain and emerging technologies, and accelerate the application of blockchain technology on the ground in various fields.

Corruption and Population Health in the European Union Countries-An Institutionalist Perspective.

Even though the European Union (EU) is considered one of the best performers in the world in fighting corruption, the situation changes when the analysis is shifted to the national dimension of its member states, with significant differences concerning the effects of corruption on population health. Using the theory of New Institutional Economics as a complementary tool that provides additional representativeness to this phenomenon, the aim of this paper is to empirically investigate the impact of corruption on population health, considering also other demographic and socio-economic determinants. Using data collected at the EU level registered between 2000–2019, we employ panel date models to validate the ongoing effect of perceived corruption on population health. Our empirical findings fully validate the institutionalist perspective, according to which countries with inclusive institutions better control the anomaly of corruption while benefitting from higher life expectancy and reducing child mortality rates. Conversely, the EU countries with rather extractive institutions suffer in terms of both longevity of population and infant mortality. Our study emphasizes that in tackling corruption pressure on population health, the most effective way is to improve the quality of governance in countries with fragile institutions.

Do institutional risk preferences exist in Chinese direct investments in ASEAN countries? A case study of Chinese-funded enterprises in Laos

PurposeInstitutional factors play an important and complex role in Chinese outward foreign direct investment (OFDI) location choices that do not seem to be influenced by a host country’s high political risks. Moreover, the location choice for OFDI is key to corporate strategic decision-making on internationalization. Therefore, this study aims to examine the direct investments of Chinese multinational enterprises (MNEs) in Laos.Design/methodology/approachCombining the purposive sampling strategy and snowball sampling method, the authors interviewed nine market- and resource-seeking Chinese enterprises in Laos. Drawing from the mainstream eclectic paradigm and the theory of new institutional economics, the authors analyzed two key variables – enterprise investment motivation and enterprise heterogeneity.FindingsChinese MNEs are not insensitive to the regressive institutional quality of host countries; the relationship effect and institutional distance are the location decision pathways along with which institutional factors influence Chinese multinationals’ investments in Laos; political stability is necessary for Chinese-funded enterprises to invest in Laos and the degree of corruption is an overestimated institutional preference factor.Originality/valueThe relationship effect is introduced into the analysis framework as an intermediate variable that influences the decision of MNEs to invest in countries with underdeveloped institutions. It verifies the significant roles of bilateral political relations and network relations in the OFDI location decisions of state-owned and private enterprises, respectively.

Does Trust Culture Influence Supplier Distribution Decisions

The decision-making of supplier distribution is based on the principle of the trade-off between costs and profits. It is a dynamic and continuous adjustment and optimization process, which is restricted by many factors. The reasonable distribution of suppliers is not only an important means to cope with the increasingly fierce competition pattern and the complex market environment, but also an effective way to coordinate the long-term and short-term strategies of enterprises and improve the efficiency of supply chain management. Generally speaking, it is more convenient for closer suppliers to interact with enterprises due to their location advantages. For distant suppliers, the frequency of interaction with enterprises may be reduced, resulting in a higher degree of information asymmetry, which may affect transaction costs. Admittedly, the supplier distribution decision may also be affected by product quality, product prices, supplier reputation, technical level, logistics costs, information costs and other factors. In fact, in addition to these explicit factors that affect transaction costs, the influence of the implicit factor of trust culture on transaction costs between enterprises and suppliers cannot be ignored.As a “lubricant”, trust culture plays an important role in supplier layout and optimal management. This paper uses text analysis to embed trust culture into the analysis framework of supplier selection decision-making. Based on the theory of new institutional economics, this paper examines the impact of trust culture as an important part of informal institution on supplier distribution decision. The results show that compared with suppliers without trust-oriented culture, suppliers with trust-oriented culture are more dispersed, and the weighted average distance increases by 12%. This phenomenon is more obvious in the samples with low dialect diversity and high transportation convenience. Further heterogeneity test results show that, in the samples of fierce market competition, low supplier concentration, and manufacturing enterprises, trust culture has a greater impact on the supplier distribution decision.The possible innovations of this study are as follows: Firstly, it focuses on the important role of trust culture as a deep cultural factor in supply chain management, enriching and expanding the literature in this field. Previous studies focus on the economic consequences of supplier selection, such as the production and operation of enterprises, the quality of accounting information, financing decisions and so on. Based on the background of “dual circulation” strategy, this paper supplements the existing literature from the perspective of the influencing factors of supplier selection. Secondly, as an informal institution, trust culture is embedded into the decision-making model of supplier selection, and the mechanism of trust culture in informal institution on supplier selection decision-making is analyzed theoretically. It helps to clarify the reasons why trust culture plays a role in the economic activity, and provides new evidence for the governance role of culture. Finally, trust culture is conducive to optimize the supply chain management of enterprises, and has an important reference value for the further understanding of enterprise supplier layout and optimal management, especially for the supply chain management and optimization under the “dual circulation” strategy.

Factors Influencing the Project Duration of Urban Village Redevelopment in Contemporary China

Project duration is one of the methods to measure the efficiency of project implementation. This study identifies the factors influencing the project duration of urban village redevelopment projects (UVRPs) in China. Based on the theory of new institutional economics and behavioral economics, this study develops three hypotheses regarding the causal relationship between institutional arrangement and project duration. Statistical analysis of data on 439 UVRPs collected from seven Chinese cities revealed that projects implemented through top-down institutional arrangements were more likely to take a long time than those implemented through bottom-up institutional arrangements. Projects implemented through top-down and government funding were more efficient than those implemented through top-down and villager funding. For bottom-up projects, there was no conclusion about whether village funding or private developer funding led to shorter project duration. Other determinants, including city, project attributes and initiation year, number of households involved, size of temporary relocation fee, and methods of selecting relocated housing, calculating temporary relocation fee and calculating relocation area influenced project duration.

Authoritarian Leadership, Conflicts and Economic Performance in Sub-Saharan Africa

RESEARCH OBJECTIVE: The goal of the paper is to analyze how the authoritarian leadership could impact economic performance in the region of Sub-Saharan Africa in the post-colonial period until currently. THE RESEARCH PROBLEM AND METHODS: Authoritarian leadership and power abuse led to a number of armed conflicts in the region since its formal independence. This may be accounted as one of the reasons, for which the region lags in terms of economic development compared to developed countries. The research comprises of qualitative and quantitative methods, including comparative analysis, basic statistics, and correlations. THE PROCESS OF ARGUMENTATION: First, the literature review was conducted with the application of comparative and system analysis. Next, based on the available World Value Survey and Global Governance Indicators data, empirical analysis of the power indicators and economic growth relations in sub-Saharan Africa was performed. The results are discussed in the context of the ideas anchored in the theory of public choice and new institutional economics. RESEARCH RESULTS: The results indicate the existence of a power paradox, which burdens development of the region, people rely on strong leaders despite the fact that strong leadership leads to power abuse and economic crises. The attitudes to politics, democracy and trust are particular for the region and may be related with this problem. CONCLUSIONS, INNOVATIONS, AND RECOMMENDATIONS: The lack of control mechanisms over the exercise of public authority in politically unstable Sub-Saharan African countries contributes to the consolidation of unfavorable attitudes and the abuse of power by privileged position by political leaders. The focus should be placed on reinforcement of institutional capacities and accountability for power abuse.

Системы управления качеством процессов товарно-денежного обмена. Альтернативный подход

Objective: to demonstrate alternative solutions to the problem of ensuring the quality of goods and services, taking into account the interests of all participants in the process of commodity and money exchange, to outline the main directions for building a quality management system based on the use of the existing scientific developments in the field of economic theory and the theory of quality management as an integral element of economics. Methods: the research is based on a systematic approach, as well as the basic provisions of the theory of new institutional economics (neoinstitutionalism), which expands the microeconomic analysis, involving factors that are not taken into account by theclassical microeconomic theory, in particular, transaction costs. Results: the study established a direct connection between the target function of the main economic agents interacting during the commodity-money exchange and the characteristic of the exchange object quality, expressed in the form of total costs (transformational and transactional); the role of unilateral account of transformation costs in the formation of opportunistic behavior of the manufacturer is determined and, as a consequence, the need for mandatory accounting of transaction costs in the formation of analytical concepts of the theory of quality management. The possibility is shown of applying an isomorphic, adequate model of the balance of interests of participants in commodity-money exchange, based on the theory of energy dynamics. Scientific novelty: for the first time, the work substantiates the existence of a direct connection between the target function of the main economic agents functioning and the commodity-monetary exchange with the characteristics of the exchange object quality. Practical significance: using the results obtained in the course of research, a manager may design a quality management system focused on meeting the needs of all participants in the commodity exchange.

Mechanisms of Weak Governance in Grasslands and Wetlands of South America

Weak governance is a major threat to sustainable development, especially in rural contexts and within ecosystems of great social and economic value. To understand and compare its arrangement in the grasslands and wetlands of the Colombian Llanos and the Paraguayan Pantanal, we build upon the Institutional and Development Framework (IAD) as we explore the role of political, economic, and social institutions and combine components of the theory of common-pool resources (CPR) and new institutional economics (NIE). This hybrid conceptualization provides a synthesis of how top-down hierarchical and market-based systems of community-based and natural resource management negatively affect sustainable development in both study areas. Our findings suggest three underlying mechanisms causing a situation of weak governance: centralized (economic and political) power, the role of central and local governments, and social exclusion. Understanding these multidimensional contextual mechanisms improves the understanding that institutional structures supporting arrangements that handle grasslands and wetlands in a sustainable way are needed to protect the ecosystem’s social and economic values, especially in rural and marginalized contexts.

중국의 협동농장 개혁이 북한에 주는 시사점 -신제도경제학 관점에서-

In this study, China’s agricultural and rural development factors after reform of the collective farm are analyzed, and the possibility of deepening reform of the North Korea’s collective farm is reviewed using the theory of new institutional economics as the framework of the analysis, and the implications were drawn based on the results. Along with China’s reform of the collective farm, ‘the household contract responsibility system’ was implemented to restore the management system centered on individual farmers, which guaranteed private property rights. The development of the ‘Hyangjin enterprise’ meant the development of the associated industries in agriculture and rural areas, and the increase in business activities resulted in the reduction of transaction costs. The market economy was promoted by improving the market system, including the government-led purchase system reform, to ensure freedom of contract among market players. Recently, the market economy has been revitalized in North Korea due to the implementation of the system for farmhouse responsibility management and corporate responsibility management and the development of marketplaces (Jangmadang). But there is not enough desire for production due to the limited guarantee of private property rights; The risk for businesses could be increased, because government transfered excessive autonomy to corporates; Jangmadang should be improved qualitatively through the monitoring and supervision.

A Perspective on Social-Ecological System Framework And New Institutional Economics Theories in Explaining Public Open Spaces (Pos) Governance And Quality Issues

There has been relatively little attention paid to the implications of property-rights structures on urban and neighbourhood commons, particularly in respect to government/state-owned public open space (POS) governance, its management and its quality. By establishing interconnections of the property-rights structure with POS governance and its quality externalities, the theory of new institutional economics, the social-ecological system framework, as well as the social dilemma theory and the commons and opportunism concepts were employed and reviewed, to synthesise a conceptual framework which can help illuminate and explain the complex nexus of an institutional-social-POS system. Findings suggested that adversarial institutional design and arrangement (e.g., maladaptive property regime, incomplete rights, and attenuated rights) and change of the property-rights system, coupled with highly positive transaction cost distributions, contribute to inefficient POS governance and management, which consequently results in a suboptimal quality and sustainability of POS. This synthesis provides policy and management insights by making public officials aware of the importance of the institutional-social-ecological system, and by making them consider a re-engineering of the POS ownership regime and its management rights via an adaptive property-rights structure assessment and re-allocation.

Individual Borrowing and Default Behaviour in Surplus and Constrained Credit Environments: Evidence from India

The present article studies borrowing behaviour between credit surplus and credit constrained environments in the context of microfinance, with respect to rural borrowing. Surplus and constrained environments get defined based on the number of the state-promoted self help groups (SHGs) in the district, and the volume of credit disbursed through these SHGs. Four hundred nineteen respondents comprising of farmers, off-farm workers, farm labourers, small businesspersons, SHG members and chit-fund or cooperative members were interviewed in the surplus district of Chittoor and the constrained district of Nalgonda in the erstwhile state of Andhra Pradesh. Statistical analyses comprising of OLS, binary logistic regression, ANOVA, t-test and chi-square tests show that surplus environments offer more adverse credit terms, especially for farmers and farm labourers. Further, surplus causes over-borrowing and defaults. Constraint propels planned repayments. Both the environments offer varying credit terms across trades. We also observe better lending terms when farmers and traders are among lenders in a constraint environment. Interlinking factor markets like land, labour and capital in a constrained environment leads to efficient outcomes, reinforcing the theory of New Institutional Economics.

Barriers to exit encountered by small farms in light of the theory of new institutional economics

For at least 25 years, processes involving structural changes have been growing more and more intense in the countries of Central and Eastern Europe, with these processes including a decline in the number of small farms. The main aim of this paper is to present the mechanisms involved in, as well as barriers to and costs preventing the exit of farms from agriculture, including those that make it difficult to transfer production resources which are being released to other companies. This research takes the form of an overview and is based on the output of new institutional economics, and on transaction cost and rent-seeking theories in particular. The most frequent difficulties encountered in the process of exit from farming include low profitability of production and the shortage of capital among potential buyers, while the lack of sellers’ financial resources and the necessity of incurring expenses related to preparing and finalising the sale of resources held by them (the actual transaction costs related to closing down farms) are frequently overlooked. The most important barriers preventing the complete liquidation of farms are the inherent transaction costs categorised as expenses, as well as the emotional costs and costs of alternatives, which are difficult to evaluate and estimate. The following notions are particularly helpful in explaining barriers to exit from farming: the concept of transaction costs and rent-seeking theory, which are both a part of the stream of thought of new institutional economics.

The determinants of informal housing price in Beijing: Village power, informal institutions, and property security

Although the how's of the informal housing market in China has been discussed widely; the answers remain conflicted. Using the theory of new institutional economics, this paper aims to answer two questions: what informal institutions secure the de facto tenure and facilitate the market? and How do informal institutions affect the pricing mechanism? We propose a conceptual framework to investigate the links between informal institutions, de facto tenure, and the price of informal housing. It is argued that villages have the ability to seek political patronage and regulate the market transactions to secure the tenure of informal housing. This ability is authorized by several formalities: the dual land system and the regime of village autonomy. The growing powers of market agencies in local development help strengthen the village's ability. The variances in ability between villages lead to a heterogeneity of tenure security, thus creating price differentials in the market. A higher tenure security increases the housing price. In conclusion, the informal housing market in China is “regulated” by a “semi-formal” system in which both informality and formality work and intertwine. A robust pricing mechanism has been emerging within the context of transition.

On a unified theory of development: New institutional economics & the charismatic leader

Rural communities face a number of compelling and specific challenges in relation to economic and social development. Issues such as declining or isolated populations, inadequate technological and commercial infrastructure, and restricted social networks are only some of the difficult challenges which must be overcome by successful development programmes; these challenges often require that unique and innovative development efforts take place. Government and third-party development organisations encourage rural development through community outreach and extension, education and training, social and economic research, and various grants and subsidised community loans. While many development efforts are structured in similar ways, there are varying degrees of success, with some outright failures. The success of a development programme differs even within similar geographies, which adds further complication to the development process. To try to enhance understanding of why this might be, we propose a focus on the role of “institutions”. Institutions are central to many rural development efforts as they offer a place of reference for community members, development researchers, and practitioners to develop a sense of norms and understanding from which to work. Over the past three decades, New Institutional Economics (NIE) has gained prominence in rural development literature through its attempt to understand how institutions allow for an efficient catalyst of economic growth in rural areas. While much advancement in rural development have been made vis-à-vis NIE theory, there is little research on which processes lead to the creation of successful indigenous institutions in rural areas. This paper argues that the creation of local institutions does not happen spontaneously, as understood by NIE theorists; rather, institutions manifest through the natural behaviour of what Max Weber called the charismatic leader. Moreover, it is maintained that the extemporaneous nature of the formation of institutions can be explained by the spontaneous virtues of the charismatic leader. Removing this specific uncertainty from NIE theory and placing it within the domain of local leadership in a rural community context reconciles key social and economic theory – which, ultimately, allows for the exploration and advancement of a unified theory of development.

The Study on Urban Agglomeration Environmental Rights Trading Paradigm—With the Emission Trading Model of Wan-Jiang City Belt

As the deterioration of the modern environmental problems, developed countries started to explore concrete ways of internalization of external effects produced by environmental problems. The theory of new institutional economics which produced the environmental property theory is widely used in the research of environmental management. On the premise of total amount control of pollution, the subjects of public power distribute or sell the rights is the basic paradigm of this method. Buyers take possession of the rights and utilize, profit from or dispose of them. The coordinated development of urban agglomeration is the main direction of China’s regional development strategy. As there are differences in environmental governance in different cities, the environment property trading system of urban agglomeration needs to be established urgently. Due to environmental property’s complexity and its attributes of public goods, the transaction of environmental property is restricted by amounts of factors. This research concludes that it is necessary to define the possessor of environmental property, strengthen the construction of trading platform, improving the public participation and supervision mechanism and control transaction cost by establishing and analyzing the emission trading model of the city-cluster along the Yangtze River in Anhui Province.

PENGATURAN PEMUTUSAN HUBUNGAN KERJA DALAM PERSPEKTIF KEPENTINGAN EKONOMI DAN HAK ASASI MANUSIA

Issue of dismissal is closely related to human rights and economics. The regulating must consider both aspects. This paper explores how the economics perspective and human rights perspective on the issue. On the economics perspective, although the neoclassical economics theory and the theory of new institutional economics have a difference in perspective on the issue, whether or not it stipulated by legislation, but both have a common view that the dismissal should not affect the company's productivity and efficiency. Meanwhile, on the human rights perspective, the worker is entitled to a fair dismissal.

On the Qing Tributary System from the Per-spective of Transaction Cost

The Qing tributary system, which is centered on China, has been regarded as a universally acknowledged and distinguished regional order in pre-modern East Asian. This system is made up of a series of informal, formal institutions and the system of governance. Such system can get a good explanation by using the transaction cost theory of new institutional economics. It is obvious that the available literature about the tributary system rarely involves transaction cost theory; so this paper tries to analyze the Qing tributary system from this perspective and break the traditional analytical paradigm of international relations scholars, and then tries to build and sum up the two explainable models about the system of rising and recession.

The case of pharmacist prescribing policy in Israel.

Pharmacy prescribing policy in Israel has been negotiated and changed in recent years in order to improve patient treatment and access to medicines, and reduce national health insurance costs by allowing pharmacists to prescribe medications. Various stakeholders and institutions were involved in the formulation process, affecting the process while representing different motives. The complexity of pharmacy prescribing policy formulation is universal - any policy project needs, for strategic and tactical reasons, to acquire an inventory of institutions involved, identify the key players and explore potential support or opposition among them. This article uses the field (theory) of new institutional economics to explain the process of pharmaceutical institutional change and identifies the stakeholders who are involved in the reform.In the framework of pharmaceutical policies, seven models of prescribing practices are outlined, and the Canadian and British prescribing models are presented. The paper then focuses on the Israeli case and the main issues that concern decision-makers in the Israeli health system, such as inequality in access to health services and the erosion of the notion of universal health services. These concerns and the involvement of different stakeholders, such as The Israeli Medical Association (IMA) and health funds, influenced and directed the final Pharmacist Prescribing Law. After several rejections and amendments the law was passed, enabling experienced pharmacists to prescribe only to patients with a previous prescription given by a physician in the hope it would improve services to patients and reduce physicians’ workloads. Here, the topic of the new prescribing policy is introduced, using tools from the new institutional school in political economy.

Metrological Harmonization as a Contributing Factor to the Development of Commercial Exchange in the Mediterranean Towards the End of the 2nd Century B.C.: The Case of the Athenian Decree on Weights and Measures

The athenian decree on weights an measures from the end of the second century B.C., IG II² 1013, is an often quoted, but rarely examined in more depth source of antique legal history. This is especially true from a legal and/or economic historian's point of view; the research conducted so far is predominantly epigraphic, metrological and numismatic. At the same time, analyzing economic aspects of antique history, particularly legal history, is becoming more and more prevalent. Douglass North's theory of New institutional economics has been of particular influence in this regard.This paper examines § 3 of the decree, where the use of a new measure of volume is ordered, and especially § 4, where the market weight of the mna emporike is reformed, i.e. incremented by 8.7%, in an attempt to clarify its legal aim and purpose as well as its possible economic implications. So far, the introduction of these alterations has been viewed and discussed by some historians mainly as a question of confrontational economic policy, i.e. if the decree was enacted following political pressure from the increasingly dominant Rome, or rather a protective measure by Athens against presumably fraudulent roman businessmen. Examining and recalculating the relation among the then prevalent weight units of the roman pound, the athenian mna and the roman and athenian talent before and after the enactment of the decree, it is argued that this law led to compatibility through an easy convertibility among these units, thereby facilitating commerce not only among Rome and Athens themselves, but between all territories familiar with either notation throughout the Mediterranean, reducing transaction costs as defined by North in the theory of New institutional economics. Taking into accounts Norths statement that measurement costs [...] are the sources of social, political and economic institutions the interpretation of the athenian decree on weights and measures in a protectionist manner of Rome against Athens is contrasted with the proposition that it might be better understood as a pragmatic and sound business regulation achieving early harmonization by standardization, which all parties involved were benefiting from.

Institutional Environment for Business-to-Business (B2B) E-Commerce Usage: Toward an Understanding in the Chinese Context

This study leveraged new institutional economics (NIE) theory to examine whether and how four facets of the institutional environment—industrial pressure, governmental support, legal adequacy, and national culture compatibility—affect business-to-business (B2B) e-commerce usage. Due to a lack of overarching research models and empirical evidence, several research steps leading to interview data were taken to address the research question: 1) a comprehensive literature review on NIE theory and the four institutional factors; 2) a pilot study surveying 11 firms in China using short, structured questionnaires; and 3) focused phone interviews with three Chinese firms using non-directive, open-response questions based on the pilot study results. Then a pattern-matching, literal replication approach was followed to conduct a cross-case analysis. Results suggested that industry pressure from customer usage and requests was an important driver of B2B e-commerce usage in those Chinese firms. A supportive government policy and regulatory environment may facilitate contractual trust in the e-commerce context. Also, Chinese culture that values face-to-face interaction and interpersonal relationship deterred e-commerce usage in those firms. These results led to proposal of a conceptual framework and four propositions for future institutional studies on B2B e-commerce usage. The theoretical and conceptual views through the lens of NIE theory and interviews with business executives provide unique insights of B2B e-commerce usage for researchers, managers, and policy-makers.