Institutions, socio-economic models
and development:
An overview of the literature and a methodology
François COMBARNOUS and Eric ROUGIER
University of Bordeaux – GREThA UMR CNRS 5113
The effects of institutions and socio-economic
models on development: theoretical settings
Why is there so much variety in the institutions and
regulations ?
• Facts: Diversity of the national systems of institutions and
regulations
• One function / Several forms
• China, « western style » ?
The effects of institutions and socio-economic
models on development: theoretical settings
How can we assess this diversity?
• NIE or NCD: Diversity as an institutional gap / A narrow view on
the diversity of institutional forms / coarse data and overuse of
instruments
• CPE, VoC: diversity of socio-economic models
• but OECD capitalisms / Asian model (Amable, 2003)
• Then, socio-economic models can be defined as original systems
of institutions and regulations that display a long lasting
efficiency and support in regard of the objective (and the means)
that are valued by the majority of the population
The effects of institutions and socio-economic
models on development: theoretical settings
What is the « comparative advantage » of our approach?
• Against the low dimensionality of the benchmark approach to
reform, our approach adopts a broad perspective of the
institutions as systems
• We focus on similarities and differences between institutions and
regulation mechanisms across nations regarding:
• Competition and labour regulations, finance and corporate governance,
training and education, social protection systems, agriculture and
environmental regulations, …
• … and the observable complementarities between these fields
• How do they relate one with another? Do they give rise to specific, new or
already known, configurations of capitalism?
The effects of institutions and socio-economic
models on development: theoretical settings
Why focusing on emerging economies among all LDCs?
• Countries that have experimented original mixes of institutions
and regulations are mostly emerging ones
• Institutional divergence does not impede the convergence in
performance
• Institutional divergence ⇒ risk diversification for the World
economy
• Piecemeal and experimentation vs global reform: accounting for
complementarities
• Useful clues for OECD economies?
The effects of institutions and socio-economic
models on development: methodological options
Questions and area of study:
• Who (and also what) are the emerging countries ?
• Which are the institutional configurations that support countries
emergence ?
• The area of study has to consider all the economies in the world,
except for the smallest ones for data availability reasons
The effects of institutions and socio-economic
models on development: methodological options
Separately considering the different dimensions of emergence…
• Agriculture
Exhaustive data collection
• Education system
Agriculture database
Education database
• Environmental issues
• Competition / Regulation and International integration
• Development financing, financial market and banking system
• Labour market
• Social welfare
Labour market database
The effects of institutions and socio-economic
models on development: methodological options
… to produce original and relevant classifications of countries,
regarding each dimension
PCA / K-means
Agriculture database
Education database
MCA / HCA
PCA / K-means
MCA / HCA
Environmental database
PCA / K-means
MCA / HCA
AG1, AG2, …, AGNag
ED1, ED2, …, EDNed
EV1, EV2, …, EVNev
New “qualitative” cross-section database
The effects of institutions and socio-economic
models on development: methodological options
A tool to answer some of our questions
New qualitative cross-section database
MCA / HCA
►Who are the
emerging countries ?
►How do they emerge ?
►Do emerging countries
constitute an homogeneous
group ?
►Is there an
« emergence path » ?
►Are they several
« ways » to emerge ?
►One country, one
emergence ?
An example of collected data : the labour market database
For each considered country from Afghanistan to Zimbabwe and
for each available year back to 1980
LABOUR FORCE COMPOSITION
JOB SECURITY AND EARNINGS
•
Labour force participation by gender / age
•
Share of working poor
•
Employment to population ratio
•
Minimum wage
•
Child labour
•
Work contract protection
•
Wage workers in working population
•
Factory inspectorate
•
Share of public employment
FUNDAMENTAL CONVENTIONS AND
COLLECTIVE BARGAINING
•
Ratification of int. labour standards
INFORMAL ACTIVITY
•
Union rights
•
Share of vulnerable employment
•
Collective bargaining
•
Employment in the informal sector
•
Labour troubles
QUALITATIVE DATABASE
Countries 2007
"Type
of
agriculture"
Afghanistan
Albania
Algeria
Angola
Argentina
……….
……….
Vietnam
Virgin Islands (U.S.)
Yemen, Rep.
Zambia
Zimbabwe
Countries 2006
AG
Afghanistan
……….
Zimbabwe
……….
……….
……….
Countries 1980
AG
Afghanistan
……….
Zimbabwe
"Type of
education
system"
"Type of
"Type of
"Type of
"Type of
"Type of
environmental competition / development financial international
considerations" regulation" financing" market » integration"
"Type of
labour
market"
"Type of
social
welfare"
ED
EV
CR
DF
FM
II
LM
SW
ED
EV
CR
DF
FM
II
LM
SW
Who are the
emerging countries ?
F2
Industrialized
countries
Emerging
countries
F1
Less developed
countries
How do they emerge ?
SW1
ED2CR1
FM2
FM3
LM4
II4
CG3
Less developed
countries
AG2
DF1
EV1
SW3
II2 LM3
CG2
Emerging
countries
CR3
ED1
CG1
F2
II1
AG3
DF2
II3
EV2
FM1
CR2
ED3
Industrialized
countries SW
ED4
LM2
AG1
F1
LM1
2
F2
« Emergence path » ?
Industrialized
countries
g in g
r
e
Em tries
n
cou
F1
Less developed
countries
F2
« One specific way » ?
ing
Emerg es
ri
count
Industrialized
countries
F1
Less developed
countries
F2
« Several ways of
emergence » ?
in g
g
r
e
Em tries
n
Cou up 1
Gro
Less developed
countries
Industrialized
countries
F1
g ing
r
e
m
E
tries
n
u
o
C
p3
Grou
ging
r
e
m
E
tries
n
u
o
C
p2
Grou
« One country / One
emergence process » ?
F2
Emerging
country 2
Emerging
country 1
Emerging
country 3
Emerging
country 9
Emerging
country 10
Emerging
country 1
Emerging
country 12
Industrialized
countries
Emerging
country 5
Emerging
country 13
F1
Emerging
country 7
Less developed
countries
Emerging
country 4
Emerging
country 14
Emerging
country 1
Emerging
country 6
Emerging
country 11
Possible complementarities between institutions and regulations in the case of LDCs
Labor
Competition on
product markets
Coordination and
Liberalization
Social Welfare
Demand (China)
Skills upgrading
Education
Bank and
finance
Trade and FDI
Agriculture
Environment
Comparative Labour and
advantage
investment
Gains from openness
/ Protection
Export vs
Subsistence
Pollutions and
innovations
Skills
upgrading
Deregulation
Surplus towards
industry
Employment creation
via innovation
Social dumping
Redistribution
reduction
Informal
protections
Reduction of
inequalities
Skills and
comparative
advantage upgrading
Productivity,
sustainability
Sustainable
consumption
Exchange reserves
Microcredit
Clean development and
access to international
financing
Struggle for land
Rents from
Commodities
Informal activities
Labor
Decent labour
Demand support
Social welfare
Education
Bank and finance
Trade and FDI
Agriculture
Remittances
Volatility
Fiscal policy Pension funds
Microcredit
Pollution deforestation