Three Decades After James Street’s “The Institutionalist Theory of Economic Development”: What Does Institutional Approach to Economic Development Mean Today?

James Street’s article, “The Institutionalist Theory of Economic Development,” (1987) is a masterpiece of institutionalist research on economic development. The thirty-year anniversary of its publishing is an invitation to review what the institutional approach to economic development means today. This article, therefore, aims to present a historical survey of works published in the Journal of Economic Issues (JEI) on economic development.     

The Index of “Economic Independence”: A New Measure of an Economy’s Ability to Survive Unilaterally

The objective of this article is to fill an existing gap in the literature by constructing an index which attempts to assess the degree of a nation’s immunity to economic risk by quantifying its level of economic independence and its ability to survive unilaterally. To do so, and following the conventional methodology of indices, the article first identifies the dimensions underlying economic independence and then selects the various indicators that best reflect each dimension. It then normalizes each indicator by using its highest and lowest historic goalposts. Finally, it averages the composite index using specific weights assigned first to each indicator and second to each dimension. The economic independence index, which was constructed for 112 countries, provides a gauge to such countries on where they stand in terms of economic resilience and how much risk they face if they were to stand alone economically, or pursue policies that are undesirable from the perspective of more economically powerful countries. This index thus provides a tool for governments to measure the direction and magnitude of government action needed to improve their respective nations’ level of economic independence.     

What and How Long Does It Take to Get Tenure? The Case of Economics and Business Administration in Austria,Germany and Switzerland

Abstract. This paper investigates the determinants of tenure decisions in Germany, Austria and the German‐speaking part of Switzerland for professorships in economics, business administration and related fields. Our dataset comprises candidates who were awarded tenure as well as those who were eligible but were not tenured. We show that business candidates have a higher probability of being tenured than economists. Youth, marital status and publications matter; gender and children do not. The market for first appointments in economics relies much more on publication performance than the market for business administration.     

Does ‘New Regionalism Theory’ Explain the Complementary Role of Foreign Direct Investment and Trade Activity in the Central and Eastern European Region? The Case of Bulgaria

In this paper we attempt to contribute to the ongoing debate about new and old regionalism. First, we focus on the presentation of regional initiatives in the Central & East European (CEE) region and on specific motives behind Foreign Direct Investment (FDI) and trade expansion in CEE countries. Then, through empirical research and the analysis of regional initiatives we found that FDI and trade are complementary to each other, while FDI is a characteristic of new regionalism signifying deeper integration. On the other hand, geographical proximity still plays an important role in trade and investment suggesting that elements from both old and new regionalism are apparent in the CEE region. Only a small number of advanced countries participate in a few regional initiatives. However, membership in regional initiatives - if isolated - does not directly and/or simultaneously imply deep integration (new regionalism).     

Polarization of life expectancy across countries: Does biological and cultural distance to the health technological frontier matter?

This study examines the evolution of the distribution of life expectancy (LE ) at birth and at ages 20 and 60 years using the stochastic kernel framework. It finds that the period between 1990 and 2013 exhibits a decrease in LE at birth dispersion and also shows that σ ‐divergence and polarization of LE at ages 20 and 60 occur across countries. Further deterioration (improvement) in relative position of countries with low (high) starting LE is observed in some sections of the LE distribution. The dispersion in LE and intradistribution movements can be attributed to genealogically transmitted human barriers to technology diffusion.     

“The mother of all political problems”? On asylum seekers and elections

As immigration to Europe has increased, so has support for extremist parties. While many studies have examined the effect of immigration on election outcomes, few have probed the effect of asylum seekers – those fleeing strife and persecution – on voting, nor has there been much research on the mediating role of local economic conditions. Drawing on county level panel data from Germany, our study fills both gaps. We find that economic circumstances, as measured by the unemployment rate and the level of disposable income, condition voters’ responses to the presence of asylum seekers, but the effects for parties on the far right and left diverge markedly. Under economic prosperity, immigration increases support on both sides of the political spectrum. As economic conditions worsen, however, the effect of asylum seekers on the vote share for the far right remains stable, but weakens for the left, eventually becoming negative. This divergence – which has not yet been reported in the literature – suggests that an influx of asylum seekers, particularly when coupled with an economic downturn, could tilt a political system rightwards. From a policy perspective, these results suggest that heterogeneity arising from local economic conditions has important implications for the regional allocation of asylum seekers.     

The impact of the judiciary on entrepreneurship: Evaluation of Pakistan's “Access to Justice Programme”

In 2002, the Pakistani government implemented a judicial reform that cost $350 million or 0.1% of Pakistan's 2002 GDP. This reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training. Nonetheless, the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship: judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform. Using data from the World Bank Group Entrepreneurship Database, our estimates suggest that this translates into an increase of Pakistan's GDP by 0.5%.     

“Bad” Decisions,Poverty, and Economic Theory: The Individualist and Social Perspectives in Light of “The American Myth”

Social outcomes are analyzed either by placing responsibility for those outcomes on the individual or to locate the cause in a specific social factor – discrimination. Here, I argue that individual decision-making cannot be the cause of poverty, illustrative of one outcome, and that commentary specifying a particular social factor is insufficient to address the fundamental, underlying cause of poverty. Rather, one must examine the nature of the economic system that lies at the root of such issues. In the process of developing the argument, it is shown that the individualist explanation of poverty is linked to the neoclassical framework, and that this individualist explanation is a product of the (capitalist) economic system itself which then induces an ideology both privileging such an explanation and preventing the development of satisfactory theory that would inform proper policy. An example of this point is drawn from the 1960’s “war on poverty” program.

The National State and Identity Politics: State Institutionalisation and “Markers” of National Identity

Nationality has been a key identity in international relations for much of the modern period, and the marriage of “nation” and “state” produced a powerful polity – the national state – that dominated global politics. This article investigates the forces that “pushed” and “pulled” nations and states together and explores the factors associated with violent identity politics. It argues that while recent decades have witnessed increasing instances of divorce between “nation” and “state” and a simultaneous proliferation of identity conflicts, the likelihood that identity conflicts will be expressed violently depends both on the character of the state (the timing of state institutionalisation relative to the construction of national consciousness, the democratic or non-democratic nature of the state, and the national or non-national basis for the legitimation of state authority) and on the principal “marker” used to construct national identity (blood, language, culture, religion, or citizenship).     

The economics of “Certaine Lewd and Ill-Disposed Persons”: Comment on Leeson

In The Invisible Hook, Peter T. Leeson explores “the hidden economics of pirates.” The implications of his work are many, and there are several clear ways in which scholars can build on his insights. First, exploring piracy helps us better understand the rent-seeking societies of mercantilist Europe. Second, public and private policy toward pirates helps us better understand the institutions and organizations that emerge in order to govern and manage common resources. Third, the nearly universal condemnation of pirates by religious authorities and political leaders as well as the association of pirates with the demonic and satanic suggests further directions for research into the interactions between ideology, politics, and economic institutions.     

War and Tourism: The Banal Geographies of Security in Colombia's “Retaking”

This paper explores the discourses and practices of state securitisation that Colombia underwent during the last decade. By focusing on the imaginative geographies of security resulting from the unexpected couplings of war and tourism in the country, it delves into the everyday and highly uneven spaces of (in)security forged by the Democratic Security regime. It shows how a feminist take on the geopolitics of war and peace offers a better understanding of the making and unmaking of banal spaces of security and their role in the production of hegemonic state formations in Colombia.     

The Limits of the “Progressive” Institutional Change: Migration and Remittances Experiences

Abstract:

The financial and business expansion towards both sides of the Mexico-U.S. border, what could be called the financial diaspora that accompanies Mexican´s migration to the United States and U.S. Corporations to Mexico, has been a process full of nuances and components with different characteristics. Beyond the governments and their migratory and investment policies, the characteristics of the different migrant groups and corporations, the cultural gaps, and the “progressive” institutional changes are subject to a dynamic of survival-assimilation-earnings. Even when powerful trials of organization are observed, a strong and imminent current of regressive institutional change (Veblen) has been gaining space. This article is circumscribed to analyze some key aspects of the financial behavior Mexican migrants to the United States, who have become entrepreneurs, have had. Their enormous limitations of financing are exposed, including the different stages to access credit to the businesses of residents in Mexico and to Mexican businesspeople abroad. The article contends the transformation in financing on both sides of the border has been decisive.     

The Monetary Approach to the Exchange Rate Determination for a “Petrocurrency”: The Case of Norwegian Krone

This paper, by following vector error correction modeling, empirically investigates some of the popular monetary models of the NOK/USD rate. The empirical results suggest that there is some scope for the monetary approach to explain the development of the NOK/USD during the period from 1997 to 2008. The coefficients in the co-integration equation of both money and output differentials are statistically significant and consistent with any of the forms of the monetary models. Moreover, empirical evidence for the proportionality between the exchange rate and relative money is provided. Our findings are robust across different measures of inflation expectations. Although there is no clear evidence regarding the exact version of the monetary model, the estimated unrestricted error correction models can fit the actual NOK/USD exchange rate. Finally, the short-term dynamics of the exchange rate are significantly affected by changes in crude oil prices.     

“Little Science” and “Big Science”: The institution of “Open Science” as a cause of scientific and economic inequalities among countries

In this paper we analyse how the science sector's incentive structure strongly contributes to the development of science and of the economy, even if, in the same time, it can cause large disparities in size and productivity of scientific sectors of different countries. In order to show that, we adopt a Schumpeterian growth model where the resources allocated to science are endogenously determined within the economy and science is organised according to the institution of “Open Science”. This latter consists in a self-reinforcing code of conduct, which comprises an incentive scheme based on the priority rule, and on the presence of both real rewards and social rewards. Social rewards take two main forms according to the source concerned: one is the social reward deriving from major innovations; another consists in high reputation enjoyed by researchers who put a high level of effort into their job, and devote themselves to the advancement of science. This set of rules causes the emergence of two locally stable steady-states: a low equilibrium, where the economy is endowed with a small science sector; and a high equilibrium, where the economy has a large science sector with rapid knowledge advancement. The two equilibria can account for the huge differences currently existing between scientific sectors of more developed and less developed countries. Comparative static results further characterise the two equilibria, since monetary and social rewards have different effects according to the type of equilibrium that emerges.     

Border Bargains and the “New” Sovereignty: Canada-US Border Policies from 2001 to 2005 in Perspective

From 2001 to 2005 Canada and the US dramatically altered the way each country views its border. In response to the attacks on New York City and Washington DC, Canada and the US entered into three important partnerships: the Smart Borders Agreement (SBA), the Container Security Initiative (CSI), and the Security Prosperity Partnership (SPP). These arrangements will be conceptualised here as “tacit bargains” whereby Canada provided the US with security in hope of renewed trust and economic accessibility. These “tacit bargains” required a concession of traditional state sovereignty so that stable and predictable relations between both countries could continue. While this process is ostensibly a violation of state sovereignty, the argument presented here is that these three “tacit bargains” represent a transition of “old” sovereignty to “new” sovereignty.     

From Hero to Zero? The Role of the Euro in the Current Crisis: Theory and some Empirical Evidence

A simple theoretical model of monetary unification and data from 11 euro members are used to investigate the common currency’s role in the macroeconomic performance of these countries. Euro membership has been typically accompanied by lower (or steady) inflation, but also by higher business-cycle volatility. In addition, synchronization of cyclical output was substantially affected by the common currency only in Greece (where it declined considerably) and Finland and Ireland (where it increased). Consistent with the theoretical predictions, the empirical evidence shows a strong negative relationship between cyclical synchronizations and volatilities, which however is not much stronger under the euro than it was during the Maastricht period.