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21 – 30 of over 120000This study aims to understand how the coevolution of multinational enterprises (MNEs) and emerging economy institutions affects social and economic (in)equality in an ambiguous…
Abstract
Purpose
This study aims to understand how the coevolution of multinational enterprises (MNEs) and emerging economy institutions affects social and economic (in)equality in an ambiguous, emerging economy context from a political actor perspective.
Design/methodology/approach
Qualitative in nature, the study builds on conversations with 20 political actors involved in the peacebuilding process in Myanmar/Burma. It analyzes their perceptions of interaction of MNEs and host economy institutions from a social constructionist viewpoint.
Findings
The study identifies four coevolution patterns which portray the evolving interaction between MNE activities and different elements of their host institutional environment as well as their consequences for social and economic (in)equality.
Originality/value
This study contributes to critical international business research on emerging economies by emphasizing the different and partly conflicting host institutions of various stakeholder groups involved in the coevolution of MNEs and host institutional environments. The more nuanced conceptualization of the complex institutional environment enables the analysis of inequality as a direct and indirect outcome of MNE–institution interaction. Thus, the study connects to the business and human rights discussion and provides insight into the consequences of MNEs’ adoption of social and environment standards.
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Tania El Kallab and Cristina Terra
This paper explores the role of colonial heritage on long-term economic development from a resource-curse perspective. The authors investigate the impact of colonial exports on…
Abstract
Purpose
This paper explores the role of colonial heritage on long-term economic development from a resource-curse perspective. The authors investigate the impact of colonial exports on long-term economic development through two channels: (1) a direct impact of the economic dependency on natural resources and (2) an indirect impact via its effect on colonial institutions, which persisted over time and influenced current economic development.
Design/methodology/approach
To address this issue, the authors use an original data set on French bilateral trade from 1880 to 1912. The authors use partial least square structural equation modeling (PLS-SEM) in the empirical analysis, so that the authors are able to construct latent variables (LVs) for variables that are not directly observable, such as the quality of institutions.
Findings
The authors find that exports of primary goods to France had a negative impact on colonial institutions and that for French colonies, this impact was driven by minerals exports. Despite its impact on colonial institutions, exports of French colonies had no significant indirect impact on their current institutions. The authors find no significant direct impact of colonial trade on current development for French colonies. Finally, colonial exports of manufactured products had no significant impact on colonial institutions among French colonies and a positive impact among non-French ones.
Research limitations/implications
Research implications regarding the findings of this paper are, namely, that the relative poor performance within French colonies today cannot be attributed to the extraction of raw materials a century ago. However, human capital and institutional development, instead of exports, are more relatively important for long-term growth. Some limitations in trying to determine the simultaneous relationship among colonial trade, institutions and economic performance are the relation between colonial trade and the extent of extraction from the colonizer, which is hard to quantify, as well as its precise mechanism.
Practical implications
Since the initial institutions set in those former colonies presented a strong persistence in the long run, their governments should focus now on building sound and inclusive political and economic institutions, as well as on investing in human capital in order to foster long-term growth. Once a comprehensive set of institutional and human resources are put in place, the quality and quantity of exports might create a positive spillover on the short-run growth.
Social implications
One social implication that can be retrieved from this study is the ever-lasting effect of both human capital investment and introduction of inclusive political and economic institutions on the long-run impact of growth.
Originality/value
The paper uses an original primary data set from archival sources to explore the role of colonial heritage on long-term economic development from a resource-curse perspective. It applies a relatively new model partial least squares path modeling (PLS-PM) that allows the construction of LVs for variables that are not directly observable, as well as channeling the impact on growth through both direct and indirect channels. Finally, it allows for the simultaneous multigroup analysis across different colonial groups.
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Luciano Nakabashi, Ana Elisa Gonçalves Pereira and Adolfo Sachsida
The Brazilian municipalities show a huge disparity in income level. The GDP per capita difference between the richest and the poorest municipalities is about 190 times, according…
Abstract
Purpose
The Brazilian municipalities show a huge disparity in income level. The GDP per capita difference between the richest and the poorest municipalities is about 190 times, according to IBGE (2000) database. This paper aims to analyze the impacts of Brazilian municipalities institutional quality on their levels of per capita income.
Design/methodology/approach
Institutionalist theory provides a plausible explanation for the gap among municipalities income level. Many empirical studies based on cross-country data have found a high correlation between institutional quality and the level of economic development, but there is little research concerning the extreme inequality within the national territory and its relationship with institutional quality. The theory suggests that the institutions matter for the level of economic development because of their effects on political power distribution, generation of economic opportunities, innovation, human capital accumulation, and so on.
Findings
Overall, an increase by one point in the average quality of the institutions is able to increase the average GDP per capita around 20 percent. This means that each point of increase in the quality of the municipality institutions is able to increase the municipality GDP per capita by R$1,000 (around US$600).
Originality/value
This is an important research that sheds light to the importance of institutional quality at local level and its influence over growth in a developing country.
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Asfaw Kumssa and Isaac M. Mbeche
This paper examines the role of institutions in the development process of African countries. It has been shown that, whereas institutions have played a greater role in the…
Abstract
This paper examines the role of institutions in the development process of African countries. It has been shown that, whereas institutions have played a greater role in the economic development of several East Asian countries, in Africa they are weaker and ineffective because of poor enforcement of the rule of law, corruption, mismanagement, absence of strong civil society and political interference. It is argued that well‐functioning institutions can promote growth and reduce poverty in Africa by providing a conducive environment for implementation and sustainable development programmes. Therefore, African countries should endeavor to establish effective, responsive and democratic institutions that will promote accountable and transparent governance and sustainable socioeconomic development.
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Since the mid‐1980s focus has shifted from stabilization to economic growth as a national goal. A large number of studies have been undertaken to explain economic growth. It is…
Abstract
Purpose
Since the mid‐1980s focus has shifted from stabilization to economic growth as a national goal. A large number of studies have been undertaken to explain economic growth. It is intended to show that the current debate between those who claim only institutions matter to economic growth and others who claim that only governance matters is totally unproductive.
Design/methodology/approach
Econometric methods are used to evaluate the recent empirical studies on linking the quality of institutions or governance to economic growth.
Findings
It is shown that the empirical model specification as well as the estimation methods used by important studies are inappropriate.
Research limitations/implications
Future research needs to incorporate not only the institutions, and governance but also the desire to save, invest and innovate to explain economic growth.
Practical implication
The existing theories of economic growth do not fully capture the complex process of economic growth implying that these theories should not be used as a guide to the screening of developmental aid to the developing countries.
Originality/value
The researchers need to change direction away from data mining and towards developing a better understanding of the growth process. Policy makers should be careful in crafting their policies.
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Frank H. Stephen and Ju¨rgen G. Backhaus
After the precipitated decline of the Soviet Empire and its satellite states, a system change seemed to be called for, and many countries embarked on social and political reforms…
Abstract
After the precipitated decline of the Soviet Empire and its satellite states, a system change seemed to be called for, and many countries embarked on social and political reforms focussing on property structures in the economy. This raised the issue of governance in the institutions that would constitute the structures in which production would have to take place. In particular, some Central European countries opted for mass privatisations of the means of production, on the face of it so as to have the people participate in the wealth of the nation. In fact, the wealth of the nation depends on the structures in which it is constituted. Dissipation of property rights will reduce the value of the nation's productive capital, whereas an intelligent structure that creates good governance structures at the same time, increases the value of the producing capital. This relatively simple insight lies at the heart of our understanding of how to analyse different processes of mass privatisation. This essay develops a theoretical framework by which different governance structures can be analysed. The framework consists of a blend of the economic theory of property rights, new institutional economics and Austrian economic theory.
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Md Akther Uddin, Md Hakim Ali and Mansur Masih
This paper aims to study institutions, human capital and economic growth in developing countries.
Abstract
Purpose
This paper aims to study institutions, human capital and economic growth in developing countries.
Design/methodology/approach
The study applies dynamic system Generalized Method of Moments (GMM) and simultaneous quantile regression on a panel of 120 developing countries for the period of 1996-2014.
Findings
The findings show that human development and institutions do have a significant positive effect on economic growth. Interestingly, institutions and human development have a significant negative interactive effect on the economic growth of developing countries. This paper argues that incremental investment in human development would impact economic growth negatively in the presence of weak and dysfunctional institutions because additional stock tends to be employed in rent-seeking and socially unproductive activities.
Research limitations/implications
The policy makers should bear in mind the critical role played by the institutions and the initial stage of growth of a country in making their education and health policies more effective.
Originality/value
The most important novelty is the study of various transmission channels: political, economic and financial institutions through which human development affect economic growth in developing countries. This paper also studies the Islamic economic development concept and empirically investigates whether Muslim countries are different from their counterparts. Moreover, this study extends the existing empirical growth literature by simultaneously applying dynamic system GMM and quantile regression techniques.
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The purpose of this paper is to explain the African socio-economic development and policy design problems using the new institutional economics methodology. The paper emphasizes…
Abstract
Purpose
The purpose of this paper is to explain the African socio-economic development and policy design problems using the new institutional economics methodology. The paper emphasizes the importance of carefully considering the policy environment setting before changing the rules of the society (institutional change) and making policy choices.
Design/methodology/approach
A conceptual approach is used to explain why major economic development policies fail in Africa and the developing world as a whole. To illustrate policy-environment-dependent institutional and policy change decision making, examples of potential institutional and policy changes are examined for Ghana’s financial, retail, and land resource sectors.
Findings
It is argued that the concept of institutional efficiency must be looked at quite differently from the Pareto-optimal concept in the neoclassical economic theory. This is because institutional analysis leans more toward normative rather than positive economics. The paper explains the counterintuitive findings that although the African business environment is low on trust due to high ethnic diversity, African business depends more on trust than contracts –weak enforcement of institutions accounts for such twists. Potential institutional changes that can help address specific socio-economic developmental challenges are suggested based on the characteristics of the African business environment.
Research limitations/implications
The paper lays bare several research hypotheses that can now be tested using the available data. These include hypotheses that strong economic growth precedes growth in the stock market activity (not the other way round); an asymmetric Tobin tax that taxes conversion into foreign currencies more than conversion into local currency reverses local currency depreciation; and for import-dependent countries, strengthening the local currency provides a positive shock to local production and budget balance.
Originality/value
The paper illustrates the pitfalls associated with blanket application of theoretical frameworks without proper contextualization. A promising way out for weak African economies is to adapt the theoretical economic predictions to local environments and help refine general economic theory through their experiences.
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Constantinos Alexiou, Sofoklis Vogiazas and Nikita Solovev
The relationship between institutional quality and economic growth is revisited.
Abstract
Purpose
The relationship between institutional quality and economic growth is revisited.
Design/methodology/approach
A panel cointegration methodology and causality analysis are applied to 27 postsocialist economies over the period from 1996 to 2016.
Findings
Utilizing the Worldwide Governance Indicators as a means of assessing the quality of institutions, it is found that in the long run, economic growth is positively associated with the rule of law and voice and accountability. In the short run, regulatory quality retains a positive effect, but voice and accountability demonstrate a puzzling negative effect on economic growth that merits further analysis. In exploring the causal dimension of our variables, supporting evidence of the strong links between the quality of institutions and economic growth is provided, hence rendering robust results.
Originality/value
To the best of the authors’ knowledge, it is the first time that an ARDL methodological framework, which addresses potential endogeneity issues, is used to investigate the relationship between institutional quality and growth in the context of postsocialist economies.
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This chapter contributes to the existing literature on institutional theory and international business research by integrating the concepts of polycentrism and institutional…
Abstract
This chapter contributes to the existing literature on institutional theory and international business research by integrating the concepts of polycentrism and institutional learning to examine how MNEs from emerging economies invest in developed countries. We argue that equity-based market entry modes and non-equity-based modes create different needs for learning about economic, regulatory and political institutions; entry modes with or without local partners lead to different levels of institutional embeddedness and institutional learning speeds. Finally, the content of institutional knowledge also determines its transferability and adaptability. We emphasize the importance of recognizing the integrated nature of economic, regulatory and political institutions from a polycentric perspective and discuss their change in different situations.