The Nature of Institutional Change in Transition

Contemporary empirical evidence of transition in Central and East European countries proves the importance of institutional change, as was claimed by advocates of this field of transition. The article assesses institutional change in the first phases of transition from the perspective of competing strategies: rapid changes versus gradualism. After pointing to some inconsistencies in this debate, the article discusses the possibility and prospects for development of a market for institutions in European transition countries. The main criterion which is used is the requirement for the rule of law as one of the foundations of a market economy. It concludes that undeveloped endogenous factors of institutional change still do not enable development of markets for institutions. Reluctance of national governments to act according to a long-run perspective is at present to a certain extent compensated by the presence of external factors of institutional change.     

New Powers and the Distribution of Preferences in Global Trade Governance: From Deadlock and Drift to Fragmentation

ABSTRACT

Existing theories make divergent predictions about the impact of new powers on the global political economy. Some argue that a more even distribution of power will erode international cooperation, while others argue that cooperation can continue with the help of international institutions to overcome collective action problems. We argue that this debate overlooks a critical determinant of the shape of power transitions: the distribution of preferences amongst the major powers. It is primarily in the context of divergent preferences that power transitions are likely to give rise to conflict. Moreover, even where preferences diverge, the gains of cooperation provide a strong incentive to continue to pursue goals through multilateralism. This situation leads to forms of institutional change unanticipated by established theories. These include deadlock in expansive multilateral fora, institutional drift as old rules cannot keep up with the changing political and economic context, and fragmentation as countries seek minilateral solutions that reduce preference diversity. We develop this preference-based, institutional argument by examining the distribution of preferences and institutional change at the World Trade Organization (WTO) and its Doha Round, where the power transition is relatively advanced.     

The foundations of constitutionalism: an analysis of debaathification

This article analyzes the administration of lustration—what Arthur Stinchcombe termed the “social basis of constitutionalism”—and its unintended consequences in comparative and international law and politics. It is concerned with the social function of animating ideas in the evolution of institutions. The article demonstrates that in the case of Iraq, the commitment of institutional engineers and transitional administrators to the idea of purifying the state, and their concomitant willingness to watch the institution of lustration naturally evolve in respect of that central idea, has had disastrous consequences for the foundations of constitutionalism. These consequences flowed from the institutional design of the U.S. occupation more generally. By reconstructing, for the very first time, the evolution of debaathification in contemporary Iraq, this article deepens our understanding of the foundations of constitutionalism. Aside from its contribution to the theory of institutional design, the article also speaks to the ongoing debate over the creation of governments, regimes, and states in the international system. In the context of this debate, which has important implications for the practice of institutional design, the administration of lustration—from within or from without—is an insufficiently understood phenomenon, making it a worthy subject for institutional analysis.

AN ANALYSIS OF POLITICAL AND INSTITUTIONAL POWER DISPERSION: THE CASE OF TURKEY

This study examines the effects of fragmented governments and fiscal authorities on budget deficits in Turkey along with political business cycle effects. For econometric analysis we will use annual data from the period 1960 to 2009. This article sheds light on various dispersion indices and their use in the field of political power and fiscal performance. The results show that the power dispersion indices of governments and fiscal institutions significantly explain the increases in the ratio of budget deficit to gross national product. The article draws attention to the unification and better coordination of fiscal authorities in Turkey. The analysis has important policy implications for Turkey and other developing countries from the viewpoint of fragmented political and administrative dispersion of power and poor budget performances. (JEL P16, H72, C22, C43)     

Adjusting an institutional framework to a globalising world: the creation of new institutions in the EEC, 1957-1992

ABSTRACT

This article explores the development of all new EEC institutions between 1957 and 1992 within policy areas relevant to the possible development of a European single currency. It argues that if most institutions created pre-1992 were not crisis management institutions as would be the case post-2008, some important institutions were created in response to the perception of a structural international banking/political/economic crisis, particularly in the 1970s. This comparison in time underlines the continuity of reflections about the missing elements of a functioning single currency area, the obstacles to reform, and sheds light on the radical institutional changes that occurred post-2008.     

The determinants of tax morale in comparative perspective: Evidence from European countries

Applying a multilevel model, we argue that tax morale is a function of individual- and contextual-level variables. Evidence presented in this article, based on the 2004–2005 European Social Survey and information on institutional settings, shows that tax morale in European countries varies systematically with socio-demographic characteristics, personal financial experiences, political attitudes, on the one hand, and regional GDP and tax arrangements on the other hand. Moreover, cross-national differences in tax morale are also related to ethnic and linguistic fractionalizations.     

The Participatory Economy. An Evolutionary Hypothesis and a Strategy for Development

This article proposes a synthetic new concept of logics of action, intending to apply it to the market, the family, and the polity (inclusive of the state and the community) as crucial instances of what may be termed provisioning domains. These are the broadest or most general domains in which economic activities take place. This article defines a logic of action as a set of socially shared rules of thought and behavior (i.e., socially shared mental models and behavioral rules) that involve a domain of action, the metric used, and the objectives or obligations associated with the positions people occupy in this domain. The domain by itself does not suffice to characterize a logic, and it has to be combined with the other two aspects. The article further discusses the relation between logics of action and institutions, arguing that logics of action are institutions with specific characteristics. They are conceived in relation to very broad provisioning domains and, as such, they have a high degree of generality. The market, the family, and the civic logics may be called provisioning institutional logics, but important differences do exist between the proposed concept herein and some treatments of institutional logics.     

The self-organisation of strategic alliances

This paper is based upon an analysis of various experiences of electronic commerce. It analyzes the role of private institutions in the organization of systems of transactions. Private institutions take place between public institutions (that are insufficiently specialized) and inter-individual governance structures (that do not benefit from scale and cognitive economies). These private institutions are very diverse and the paper points out the various types of services provided by diverse institutions depending on their constitutional mode.

While various possible institutional frameworks have very different features in terms of coordination, there is no most efficient institutional environment. Moreover, the emergence process of these institutional framework strongly influences their ability to survive. Very different institutional frameworks can therefore organize electronic trade quite differently in the various industries     

Seniority and Incumbency in Legislatures

In this article, we elaborate on a strategic view of institutional features. Our focus is on seniority, though we note that this general approach may also be deployed to understand other aspects of institutional arrangements. We have taken the initial game‐theoretic model of seniority of McKelvey and Riezman ( 1992 ), simplified it in order to characterize its fundamental implications, generalized these results in several ways, and extended the model by deriving additional implications. The broad messages of our article, articulated by McKelvey and Riezman as well, are two. First, the endogenous choice of institutional features like seniority by self‐governing groups is strategic. While the fine‐grained ways of doing things in an institutional context surely serve internal functional objectives, these are not the only objectives. Agents making choices on how to govern themselves have private motivations – in the case of elected politicians they often revolve around re‐election. This leads to our second broad message. The institutions through which self‐governing groups conduct their business do not exist in a vacuum. They are embedded in a broader context. Those offering functional explanations for various institutional features overlook this. Particular institutional arrangements have effects outside the governance institution itself. These effects, in principle, could be accidental by‐products. Our strategic approach, however, argues that they may well be the primary reasons for a practice being instituted.     

Endogenous Selection of Institutions and Their Exogenous Effects

Institutions shape social outcomes, yet institutions themselves are products of political choices. When institutional choices are determined by the same political and social processes that they shape, institutions are endogenously selected. Here I address the question of whether this endogenous institutional selection necessarily implies endogenous institutional effects. If it does, the use of institutional parameters as independent variables explaining policy outcomes and properties of the resulting political regimes, widespread in the literature on comparative political institutions, is hard to justify. I argue, however, that strategic choice of the rules of the game implies designers' ability to obtain their preferred institutional effects only under conditions of complete information. Under incomplete information, ex-post institutional effects do not need to be endogenous, since at the time of designing the rules the designers were not in position to control the selection of these effects. The reason why the choice of the rules does not imply the choice of their effects lies in the intervening and interactive (rather than additive) role played by the environmental parameters, including players' own characteristics, that are not revealed at the time of the institutional choice. Additionally to the model which illustrates the logic of the argument and the workings of intervening structural effects, I find supporting evidence in the processes of design of election laws in post-communist Europe, where stages of design and implementation followed each other in a very quick succession yet were characterized by substantial changes in manifested institutional preferences of the key political players.