New European Banking Governance and Crisis of Democracy: Bank Restructuring and Privatization in Slovenia

ABSTRACT

The paper makes three contributions to the understanding of the post-crisis European banking governance. First, it offers a more comprehensive approach to banking governance, beyond the Banking Union, through its concept of ‘New European Banking Governance’ (NEBG) that incorporates EU state aid rules and fiscal regulations. Second, it considers the impact of NEBG on democratic institutions and processes in EU member states, an under-researched topic in the literature on European banking governance. Finally, through its in-depth case study of Slovenia it considers the NEBG in relation to peripheral Eurozone states. It argues that the post-crisis banking governance framework of the EU not only severely constrained the Slovenian state in its policy choices but rearranged its policy-making institutions in a way that restricted and continues to restrict democratic banking policy formation.     

From geopolitics to geoeconomics: Transnational state effects in the borderlands

This article reads Ohmae's arguments about ‘the end of the nation‐state’ against the arguments of Luttwak about the centrality of ‘geoeconomics’ in the new world order. By exploring the limits of both their arguments, the article develops a much more critical account of geoeconomics, suggesting that it can be used by scholars of boundaries and geopolitics to come to terms with the development of cross‐border regionalism and associated transnational state effects (i.e. transnational governance imperatives) in the context of free trade. Geoeconomics is thus argued to describe the localised changes in governance imperatives implicated in a series of economically‐driven and quite quotidian challenges to national borders on the ground in both North America and Europe. The article outlines how an examination of localised strategies to create cross‐border regions in the context of globalised economic interdependencies offers a research window onto processes currently challenging the nation‐state from the ground up. As such, it is argued that the case studies discussed here also offer a way of empirically evaluating the geoeconomic influence of discourses about ‘the end of the nation‐state’ promoted by writers such as Ohmae.     

Rewarding the introduction of multiparty elections

Do aid donors reward the adoption of multiparty elections? Are multiparty elections rewarded in both democracies and electoral authoritarian regimes? How do the rewards for institutional reforms compare to the rewards for substantive improvements in governance and political rights? These questions are of particular interest given both the spread of democracy and the emergence of autocracies with multiparty elections for the executive and legislature as the modal form of authoritarianism. To answer these questions, we examine temporal dynamics in aid flows before and after transitions to multiparty elections and the strategic allocation of aid rewards to specific sectors depending upon electoral competition and substantive improvements in governance and political rights. We find that, in the post-Cold War era, bilateral and multilateral donors reward the adoption of multiparty elections in both democracies and electoral authoritarian regimes while also rewarding substantive improvements in governance and political rights. Sector specific analyses reveal that multiparty elections are rewarded with greater democracy aid and economic aid in both democratic and electoral authoritarian regimes. Nevertheless, the quality of elections matters: the adoption of democratic elections receives greater aid gains than the adoption of authoritarian elections.     

Measuring of International Financial Integration with a Multicriteria Decision Aid Approach

ABSTRACT

Despite the diversity of advanced approaches, the concept of ‘financial integration’ couldn’t be explicitly analyzed. Indeed, empirical studies have shown that the measures of international financial integration are one-dimensional analysis. Due to the ambiguity of the concept and its multiple determinants, it must be analyzed in multidimensional levels. The interest of this research is a proposal of a decision aid by a multicriteria approach (ELECTRE TRI) for determining the ranking of 47 countries according to the links between their degree of international and financial dependencies and the behavior of financial actors (trying to make governance decisions or diversification strategies of international portfolio).

Abbreviations: MCDA – Multi-Criteria Decision Approach     

China’s rural institutions and governance since the beginning of the rural reform

ABSTRACT

This paper looks at how China governs its vast rural territories. The structure of rural governance relies not only on the extent and form of the state’s authority, but also on the principal–agent relationship between the state and local stakeholders, as well as the role of the informal institutional arrangements that serve as the foundation for rural governance. China’s 40 years of reform and opening have led to the transformation of rural China into urban and rural China. The rules and order of informal institutions have evolved and changed significantly, and the cost-benefit structure of formal state governance has been amended. The appropriate rural governance system for village transformation improves the performance of the country’s direct governance and the entrustment–agent system for village governance. Further, the rural governance system balances formal and informal institutions to achieve an effective institutional arrangement.     

The healthcare rationing debate: more clarity by separating the issues?

Summary

The rationing debate is often confused by dealing with several different issues concurrently. This paper introduces a typology and matrix that separate two of the most important of these issues: the transparency of the debate and the mode of rationing itself. The transparency of the debate is the need to think about how to deal with the following political issue: should the rationing of medical care happen tacitly and be left to the parties involved (implicit), or should it be open to public scrutiny and debate (explicit)? At the same time (but to be examined independently) there is the mode of rationing: how are the responsible parties to develop ways of allocating scarce resources? This can be achieved either implicitly, e.g. via clinical bedside reasoning, or explicitly, i.e. openly with the aid of rigorously developed and tested algorithms. Thinking about these issues separately may help to bring more clarity to the rationing debate. This paper also discusses some implications resulting from such a separation.     

Innovation and new public water

ABSTRACT

Technological innovation has made significant improvements to water services but water delivery remains largely unchanged since Victorian times. This is because water is an essential, non-substitutable resource with little potential for economies of scale. By contrast, there has been dynamic innovation in the governance of water services, with privatization now giving way to a significant shift back to public ownership and management, with new and creative forms of societal engagement. This article reviews these governance changes through the lens of a “hydrosocial cycle”, arguing that innovations in “new public water” can only be achieved by recognizing how water-society relations take place.     

On the role of governance and health aid on child mortality: a cross-country analysis

Globally, child mortality rates continue to be unacceptably high despite improvement in child health outcomes. The role of macro level indicators, such as governance and health aid on child mortality, remains under-researched. The aim of this article is to analyse the influence of governance and health aid on child mortality using cross-country data. A negative association between governance and the mortality rate of children less than 5 years of age was found using System Generalised Method of Moments Dynamic Panel, the linkage also exists in the results of quantile and semi-parametric regression. However, as in other literature, the role of health aid on child mortality remains ambiguous.     

Quality-oriented growth: a new trend for Chinese firms

ABSTRACT

Based on data from the China Employer-Employee Survey (CEES), this study analyses the actual effect of quality-driven growth on firms’ performances in the economic transition of recent years. The results show positive and significant effects between the firms’ performance and quality-oriented growth, which is defined as a strategy that supports the spirit of greater entrepreneurial innovation, the advancement of input quality, and corporate governance improvement. Using a quality-driven growth mode, firms can effectively relieve the adverse effect of downward macroeconomic growth pressure on performance. This study proposes that China’s macroeconomic policy should shift from demand-oriented management to supply-oriented management, with a particular focus on quality development strategy. Moreover, firms should establish a quality-driven development strategy, facilitating a spirit of entrepreneurial innovation, advancing input quality, and improving corporate governance. This strategy will increase the firm’s performance, and effectively relieve the macroeconomic downward pressure.

Abbreviations: CEES: China Employer-Employee Survey, TFP: Total factor productivity     

Doing Away with the Sovereign: Neoliberalism and the Promotion of Market Discipline in European Economic Governance

ABSTRACT

This article proposes a critical reading of market discipline and its limitations as a mechanism in European economic governance. Consistent with neoliberal beliefs about market-based governance, the Economic and Monetary Union (EMU) is premised on the functioning of the government bond market as a fiscal-policy discipliner. However, the operation of market discipline requires that neither governments nor their private creditors can rely on an authority to bail them out. It, therefore, precludes the kinds of intervention by Eurozone’s supranational institutions witnessed during the euro crisis. In the post-crisis context, efforts to strengthen market discipline continue to be frustrated by the growing reliance of financial institutions on government bond markets as well as the European Central Bank’s (ECB) active participation in those markets. Having undermined the credibility of the market as an autonomous and apolitical mechanism of discipline, European economic governance struggles to come to terms with the rise of a supranational ‘economic sovereign’ in the Eurozone.     

Teaming Up? China,India and Brazil and the Issue of Benefit-Sharing from Genetic Resource Use

ABSTRACT

This article focuses on an area that has not been systematically addressed but is of crucial importance to China, India and Brazil: the global governance of genetic resources. All three are biodiversity-rich and, ever since biotechnology promised to turn DNA into gold, have been significant players in the genetic-resources regime complex. Shortcomings notwithstanding, the establishment of a new access and benefit-sharing regime constitutes a rare instance where emerging countries have succeeded in becoming rule-makers of sorts. We analyse how these three countries have sought to pursue their interests in this area, especially after the extension of national sovereignty over previously ‘free’ genetic resources and the erection of a complex set of rules attempting to regulate access to and benefits from their utilisation from the early 1990s onwards. Despite presenting a generally unified front in international fora, their domestic implementation differs significantly and raises questions about the continuation of a common international position. The article adds to our understanding of emerging countries’ engagement with global governance by focusing on the concrete drivers and domestic processes that have motivated and shaped the agency of China, India and Brazil in this new policy regime.     

Institutionalism and the State: Founding Views Reexamined

Economists in the institutional tradition have spent a great deal of time dealing with the notions of governance and the state. Yet that school of thought has yet to develop a complete unified theory of either governance or the state. In the work Commons and Veblen we see very different levels of analysis and commentary on these issues. Both authors are recognized as founding thinkers in the Institutional school yet they differ on how they use their methods and they have differing ideas about the usefulness of the state. Still, considered together they present a fairly complete and useable set of ideas about how governance and the state work. This essay summarizes, clarifies, and somewhat expands on the views held by Commons and Veblen with the view of moving towards a clear and concise institutional theory of the state.

Sovereign Debt Management and the Transformation from Keynesian to Neoliberal Monetary Governance in Britain

ABSTRACT

Private financial markets are central to the implementation of monetary governance. This necessary integration of public and private finance means the way states govern must evolve with developments in financial markets. This article examines how the rise of liability management underpinned a shift to market-based banking and transformed the operation of monetary policy in Britain. It assesses the period of reform between 1967 and 1981 and what this meant for monetary governance. Political economy literature depicts this period as a shift to depoliticised, deregulated governance with public authority giving way to market power. This paper challenges this perspective on the grounds that it misconstrues the problem policymakers faced. The shift from Keynesian to neoliberal monetary governance came in response to the change in banking practice with the rise of liability management and a parallel money market. This underpinned an explosion of credit creation that the old system of monetary policy, organised around the Base Rate and ‘primary’ discount market could not fix. As a result, the monetary authorities had to render this new financial environment governable. The period should therefore be reassessed in terms of the capacities the state attempted to construct to conduct monetary governance.     

Can good governance lower bank intermediation costs?

ABSTRACT

This paper argues that better governance practices can reduce the costs, risks and uncertainty of financial intermediation. Our sample covers 100 high-, middle- and low-income countries during 1996 to 2015. Using panel regressions accounting for endogeneity and cross-sectional dependance, we find that net interest margins of banks are lower if various governance indicators are better. Governance indicators range from comprehensive indices on the rule of law to more narrow indicators like ethics of private firms. The global financial crisis seems not to have had a strong impact except via credit risk. Finally, we estimate that potential annual savings from lower net interest margins could average almost 0,3 percent of GDP, had the governance indicators been at the top decile. These simulations lend credence to the intuition that better governance practices should reduce costs, risks and uncertainty.     

Relative Effectiveness of Bilateral and Multilateral Aid on Development Outcomes

Aid donors are interested in understanding whether allocating aid via bilateral or multilateral channels might be more effective for achieving development goals. We review 45 papers that empirically test the associations between bilateral and multilateral aid flows and various development outcomes including gross domestic product growth, governance indicators, human development indicators and levels of non‐aid investment flows. Findings suggest that differences between countries and regions, time periods, aid objectives, and individual donor organizations all may influence the effectiveness of aid delivered bilaterally and multilaterally. We find, however, no consistent evidence that either bilateral or multilateral aid is more effective overall.     

On <Emphasis Type="Italic">Private Governance</Emphasis>

Edward Peter Stringham’s book Private Governance: Creating Order in Economic and Social Life (2015) is a compelling defense of the proposition that private governance is more widely used and more effective than most people think. Stringham looks to history to see how people solved problems of fraud and cheating without government intervention and provides example after compelling example to contradict the strong claim that a government or any third-party enforcer is necessary for voluntary exchange. While Stringham doesn’t take on the tough problem that private governance is not sufficient for its task, his book is intended to be the beginning, not the end, of thinking about private governance.     

A Threshold Analysis of the Relationship Between Governance and Growth

Abstract

Quality of governance has been found to be significant in economic growth. We investigate, using a threshold technique, whether the quality of governance matters equally across all levels of economic development. We find that the quality of governance is most significant for only a subset of relatively poor countries, while education is most significant for the poorest countries, and region is most significant for the wealthiest.     

INTRODUCTORY REMARKS

Abstract

This special issue aims at promoting the economics of knowledge governance as a meaningful research field. It especially helps to the understanding of current performance of economic systems. Some guidelines are suggested in order to delineate the economics of knowledge governance.     

CORPORATE GOVERNANCE AND THE GOVERNANCE OF KNOWLEDGE: RETHINKING THE RELATIONSHIP IN TERMS OF CORPORATE COHERENCE

Abstract

Corporate governance and the governance of knowledge were for a long time distinct fields of analysis. Reasons for this incompatibility are linked to the restricted vision of corporate governance supported by shareholder value which essentially refers to information rather than knowledge. In this paper, we argue that other visions of corporate governance exist which are also closer to knowledge dynamics and knowledge governance problems. We elaborate thus on the possible reconciliation between corporate governance and the governance of knowledge. We sustain that each key actor (the manager and the investor) embodies a piece of diversified and localized knowledge related to his/her specific domain and field of experience, and these different modules of knowledge have to be recombined by an appropriate mode of corporate governance that stimulates corporate development. In this perspective, the reconciliation really appears essential since managers, by defining and selecting innovative processes, and investors, by determining the money that is invested to sustain these processes, both take part in the creation and governance of new knowledge by the firm. We show that this reconciliation can be based on the notion of corporate coherence of the cognitive firm that allows replacing the conventional conflicting vision of corporate governance by a new vision based on cooperation between managers and investors that collectively contribute to corporate development and coherence.     

Social Security Reform and Corporate Governance

Abstract

This paper considers implementation issues arising from potential reforms to the United States Social Security system. Many reform proposals involve individually invested accounts, but the corporate governance implications of such accounts have not been fully explored. Existing reform plans will result in a large fraction of votes being concentrated at one private fund manager. The implications for corporate governance and debt management under alternative fund management strategies are evaluated. The use of futures to construct synthetic investments could alleviate corporate governance and debt management problems.