Institutional complementarity for social and economic development
Abstract
oday the prevention of global challenges (from global security to the problems of poverty) relates to the institutional quality. Nowadays, the social standards or other “social rules” make the part of the market system, since they are built into the country’s institutional structure. Neither social nor economic reforms can be implemented without the support through institutional mechanisms.
The purpose of this paper is to explore the relationship between social sector institutions and basic institutions, taking into account the economic development of countries and the way in which they are formed.
A number of empiric studies confirmed significant role of institutions to provide conditions for economic development. In order to define and assess the link between the basic institutions and the social sector institutions, we formed panel data that includes 20 countries for the period from 2007-2014. We assessed quality of the basic institutions using The Worldwide Governance Indicators (WGI). WGI methodology provides an evaluation of six dimensions of the institutional quality that enables to define the connection and the impact of every dimension on the institutional quality of the social sector.
The model additionally evaluates the impact of the incomes distribution inequality, general economic welfare on the institutional quality of the social sector. Among all dimensions of governance “Rule of Law” and “Regulatory Quality” the statistically significant direct impact on the institutional quality of the social sector has been revealed. It confirms the complementarity of basic institutions and institutions of the social sector.
Keyword : institutions, economic development, complementarity, institutional quality, social sector, dimensions of governance
How to Cite
Bilan, Y., Vasilyeva, T., Lyeonov, S., & Bagmet, K. (2019). Institutional complementarity for social and economic development. Business: Theory and Practice, 20, 103-115. https://doi.org/10.3846/btp.2019.10
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Bagmet KV, Haponova O (2018) Assessing the impact on social sector: A macroeconomic approach. SocioEconomic Chal-lenges 3 (2): 103-108. https://doi.org/10.21272/sec.3(2).103-108.2018
Bartlett W, Сuǐkoviǎ N, Jurlin K, Nojkoviǎ A, Popovski V (2013) Institutional quality and growth in EU neighbourhood countries. WP5/11 Search Working Paper http://www.ub.edu/searchproject/wp-content/uploads/2013/01/WP-5.11.pdf
Boyer R (2005) Coherence, diversity, and the evolution of capitalisms – the institutional complementarity hypothesis. Evolutionary and Institutional Economics Review 2 (1): 43-80. https://doi.org/10.14441/eier.2.43
Boyer R (2007) Growth strategies and poverty reduction: the institutional complementarity hypothesis. PSE Work-ing Papers n°2007-43 https://halshs.archives-ouvertes.fr/halshs-00587703/document
Bruinshoofd A (2016) Institutional quality and economic performance. Retrieved from https://economics.rabobank.com/publications/2016/january/institutional-quality-and-economic-performance/
Cavalcanti T, Novo Á (2005) Institutions and economic develop-ment: How strong is the relation? Empirical Economics 30: 263. https://doi.org/10.1007/s00181-004-0217-5
Chong A, Gradstein M (2007) Inequality and institutions. The Review of Economics and Statistics 89 (3): 454-465. https://doi.org/10.1162/rest.89.3.454
Chousa J, Khan H, Melikyan D, Tamazian A (2005) Assessing institutional efficiency, growth and integration. Emerging Markets Review 6: 69-84. https://doi.org/10.1016/j.eme-mar.2004.09.004
Deeg R (2005) Complementarity and institutional change: How useful a concept? Discussion Paper SP II 2005 – 21, Wissen-schaftszentrum, Berlin https://bibliothek.wzb.eu/pdf/2005/ii05-21.pdf,/a>
Dkhili H (2018) Environmental performance and institutions quality: evidence from developed and developing countries. Marketing and management of innovations (3): 333-344. https://doi.org/10.21272/mmi.2018.3-30
Draskovi V, Popov E, Peleckis KK (2017) Modelling of institu-tional changes in transition countries – the gap between the theory and practice. Montenegrin Journal of Economics 13 (1): 121-140. https://doi.org/10.14254/1800-5845/2017.13-1.9
Draskovic M, Milica D, Mladen I, Chigisheva O (2017) Preference of institutional changes in social and economic development. Journal of International Studies 10 (2): 318-328. https://doi.org/10.14254/2071-8330.2017/10-2/22
Efendica A, Pugh G (2015) Institutional effects on economic performance in transition: a Dynamic Panel Analysis. Acta Oeconomica https://www.researchgate.net/profile/Adnan_Efendic2/publication/268977486_Institutional_effects_on_economic_performance_in_post-socialist_transition_a_dy-namic_panel_analysis/links/547c2ec00cf205d16881d588/Institutional-effects-on-economic-performance-in-post-socialist-transition-a-dynamic-panel-analysis.pdf
Efendica A, Pughb G, Adnettb N (2010) Institutions and eco-nomic performance: System GMM modelling of institutional effects in transition http://www.efsa.unsa.ba/~adnan.efen-dic/materijali/Efendic%20et%20al.%202010%20INSTITU-TIONS%20IN%20TRANSITION.pdf
Eicher T, Schreiber T (2010) Structural policies and growth: time series evidence from a natural experiment. Journal of Development Economics 91 (2010): 169-179. https://doi.org/ 10.1016/j.jdeveco.2009.05.003
Elert N, Halvarsson D (2012) Economic freedom and institutional convergence. Ratio Working Paper No. 196, November 27, 2012http://ratio.se/app/uploads/2014/11/ne_dh_-working_paper_200_elert_trippleh.pdf
Hájek Ja, Hoeschle F, Bilan Yu, Strielkowski W (2016) Economic performance and convergence in the Eurozone. Marketing and Management of Innovations 1: 206-223.
Hall JC (2015) Institutional convergence: Exit or voice? West Virginia University. September 2015 http://busecon.wvu.edu/phd_economics/pdf/15-40.pdf
Harold, N Ng Yan (2018) Econometric analysis of long and short-run effects of exports on economic growth in Cameroon (1980–2016). Financial Markets, Institutions and Risks 2 (1): 50-57. https://doi.org/10.21272/fmir.2(1).50-57.2018
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IMF (2005) World Economic Outlook, September 2005: Chap-ter 3. Building. Institutions – IMF https://www.imf.org/en/Publications/WEO/Issues/2016/12/31/World-Economic-Outlook-September-2005-Building-Institutions-18303
Jayasundera M (2017) Ancient Sri Lankan Economic Systems. Financial Markets, Institutions and Risks 1 (4): 24-27. https://doi.org/10.21272/fmir.1(4).24-27.2017
Jovovic R, Draskovic M, Delibasic M, Jovovic M (2017) The concept of sustainable regional development – institutional aspects, policies and prospects. Journal of International Studies 10 (1): 255-266. https://doi.org/10.14254/2071-8330.2017/10-1/18
Kaasa A, Kaldaru H, Parts E (2007) Social capital and institutional quality as factors of innovation: Evidence from Europe ftp://ftp.repec.org/opt/ReDIF/RePEc/mtk/febpdf/febawb55.pdf
Kaasa A (2016) Social capital, institutional quality and produc-tivity: Evidence from European Regions. Economics and Sociology 9 (4), 11-26/9-4/1.Kandil M (2009) Determinants of institutional quality and their impact on economic growth in the MENA region. Interna-tional Journal of Development Issues 8 (2): 134-167. https://doi.org/10.1108/14468950910997693
Kaufmann D, Kraay A, Mastruzzi M (2010) The Worldwide Governance Indicators: Methodology and Analytical Is-sues. Policy Research working paper; no. WPS 5430. World Bank. © World Bank https://openknowledge.worldbank.org/handle/10986/3913 License: CC BY 3.0 IGO
Iqbal K (2018) Human development and economic growth in Pakistan. SocioEconomic Challenges 3 (2): 66-75. https://doi.org/10.21272/sec.3(2).66-75.2018
Kostel M, Leus D, Cebotarenco A, Mokrushina A (2017) The sustainable development goals for Eastern partnership coun-tries: Impact of institutions. SocioEconomic Challenges 1 (3): 79-90. https://doi.org/10.21272/sec.1(3).79-90.2017
Kyrychenko K, Samusevych Y, Liulova L, Bagmet K (2018) Innovations in country’s social development level estima-tion. Marketing and management of innovations (2): 113-128. https://doi.org/10.21272/mmi.2018.2-10
Logan W, Esmanov O (2017) Public financial services transpar-ency. Business Ethics and Leadership 1 (2): 62-67. https://doi.org/10.21272/bel.1(2).62-67.2017
Lunyakov OV, Vasilyeva TA, Leonov SV (2013) Analysis of inter-nal and external imbalances in the financial sector of Ukraine’s economy. Actual Problems of Economics 12 (150): 176-184.
Melnyk L, Sineviciene L, Lyulyov O, Pimonenko T, Dehtyarova I (2018) Fiscal decentralization and macroeconomic stability: The experience of Ukraine’s economy. Problems and Perspectives in Management 16 (1): 105-114. https://doi.org/10.21511/ppm.16(1).2018.10
Pagano U (2011) Interlocking complementarities and institutional change. Journal of Institutional Economic 7 (3): 373-392. https://doi.org/10.1017/S1744137410000433
Pilia G (2017) Estonia and Lithuania in transition: A compared analysis of the change and its costs and benefits. Business Ethics and Leadership 1 (2): 12-19. https://doi.org/10.21272/bel.1(2).12-19.2017
Redek T, Susjan A (2005) The impact of institutions on economic growth: The case of transition economies. Journal of Eco-nomic Issues XXXIX (4): 995-1027. https://doi.org/10.1080/00213624.2005.11506864
Rivera Rios MA, Lujano Lopez JB, Garcia Veiga J (2018) The fifth global kondratiev. Low economic performance, instability and monopolization in the digital age. Marketing and Management of Innovations (2): 270-291.
Rogowski R (2017) Theoretical reasons for economic sociol-ogy. SocioEconomic Challenges 1 (4): 45-49. https://doi.org/10.21272/sec.1(4).45-49.2017
Schönfelder N, Wagner H (2018) Institutional convergence in Eu-rope. Discussion Paper No. 2018-53. July 02, 2018 http://www.economics-ejournal.org/economics/discussionpapers/2018-53
Shvindina H (2017) Leadership as a driver for organizational change. Business Ethics and Leadership 1 (1): 74-82. https://doi.org/10.21272/bel.2017.1-09
Tamilina L, Tamilina N (2014) Heterogeneity in institutional ef-fects on economic growth: Theory and empirical evidence. European Journal of Comparative Economics 11 (2): 205-249.
Tamilina L, Tamilina N (2017) Post-communist transition as a path break: Comparing legal institutional effects on economic growth between path-breaking and path-drifting institutional reforms. The Journal of Applied Economic Research 11 (3): 315-347. https://doi.org/10.1177/0973801017703513
Valeriani E, Peluso S (2011) The impact of institutional quality on economic growth and development: An Empirical Study. Journal of Knowledge Management, Economics and Informa-tion Technology 6.
Vasilyeva T, Lyeonov S, Adamičková I, Bagmet K (2018a) Insti-tutional quality of social sector: the essence and measure-ments. Economics and Sociology 11 (2): 248-262. https://doi.org/10.14254/2071-789X.2018/11-2/17
Vasylieva T, Lyeonov S, Lyulyov O, Kyrychenko K (2018b) Mac-roeconomic stability and its impact on the economic growth of the country. Montenegrin Journal of Economics 14 (1): 159-170. https://doi.org/10.14254/1800-5845/2018.14-1.12
Vitola A, Senfelde M (2015) The role of institutions in economic performance. Business: Theory and Practice 16 (3): 271-279. https://doi.org/10.3846/btp.2015.498
WEF (2018) Klaus Schwab, World Economic Forum. The Global Competitiveness Report 2017–2018 http://www3.weforum.org/docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf
Williams A, Siddique A (2008) The use (and abuse) of governance indicators in economics: a review. Economics of Governance 9: 131. https://doi.org/10.1007/s10101-006-0025-9
Yevdokimov Y, Melnyk L, Lyulyov O, Panchenko O, Kubatko О(2018) Economic freedom and democracy: Determinant factors in increasing macroeconomic stability. Problems and Perspectives in Management 16 (2): 279-290. https://doi.org/10.21511/ppm.16(2).2018.26
Acemoglu D, Johnson S (2005) Unbundling institutions. Journal of Political Economy 113 (5): 949-995. https://doi.org/10.1086/432166
Amable B (2016) Institutional complementarities in the dynamic comparative analysis of capitalism. Journal of Institutional Economics 12 (1): 79-103 https://www.cambridge.org/core/services/aop-cambridge-core/content/view/8ED45248B6309CA1FB8504CA48E05F9D/S1744137415000211a.pdf/institutional_complementarities_in_the_dynamic_compara-tive_analysis_of_capitalism.pdf
Bagmet KV, Haponova O (2018) Assessing the impact on social sector: A macroeconomic approach. SocioEconomic Chal-lenges 3 (2): 103-108. https://doi.org/10.21272/sec.3(2).103-108.2018
Bartlett W, Сuǐkoviǎ N, Jurlin K, Nojkoviǎ A, Popovski V (2013) Institutional quality and growth in EU neighbourhood countries. WP5/11 Search Working Paper http://www.ub.edu/searchproject/wp-content/uploads/2013/01/WP-5.11.pdf
Boyer R (2005) Coherence, diversity, and the evolution of capitalisms – the institutional complementarity hypothesis. Evolutionary and Institutional Economics Review 2 (1): 43-80. https://doi.org/10.14441/eier.2.43
Boyer R (2007) Growth strategies and poverty reduction: the institutional complementarity hypothesis. PSE Work-ing Papers n°2007-43 https://halshs.archives-ouvertes.fr/halshs-00587703/document
Bruinshoofd A (2016) Institutional quality and economic performance. Retrieved from https://economics.rabobank.com/publications/2016/january/institutional-quality-and-economic-performance/
Cavalcanti T, Novo Á (2005) Institutions and economic develop-ment: How strong is the relation? Empirical Economics 30: 263. https://doi.org/10.1007/s00181-004-0217-5
Chong A, Gradstein M (2007) Inequality and institutions. The Review of Economics and Statistics 89 (3): 454-465. https://doi.org/10.1162/rest.89.3.454
Chousa J, Khan H, Melikyan D, Tamazian A (2005) Assessing institutional efficiency, growth and integration. Emerging Markets Review 6: 69-84. https://doi.org/10.1016/j.eme-mar.2004.09.004
Deeg R (2005) Complementarity and institutional change: How useful a concept? Discussion Paper SP II 2005 – 21, Wissen-schaftszentrum, Berlin https://bibliothek.wzb.eu/pdf/2005/ii05-21.pdf,/a>
Dkhili H (2018) Environmental performance and institutions quality: evidence from developed and developing countries. Marketing and management of innovations (3): 333-344. https://doi.org/10.21272/mmi.2018.3-30
Draskovi V, Popov E, Peleckis KK (2017) Modelling of institu-tional changes in transition countries – the gap between the theory and practice. Montenegrin Journal of Economics 13 (1): 121-140. https://doi.org/10.14254/1800-5845/2017.13-1.9
Draskovic M, Milica D, Mladen I, Chigisheva O (2017) Preference of institutional changes in social and economic development. Journal of International Studies 10 (2): 318-328. https://doi.org/10.14254/2071-8330.2017/10-2/22
Efendica A, Pugh G (2015) Institutional effects on economic performance in transition: a Dynamic Panel Analysis. Acta Oeconomica https://www.researchgate.net/profile/Adnan_Efendic2/publication/268977486_Institutional_effects_on_economic_performance_in_post-socialist_transition_a_dy-namic_panel_analysis/links/547c2ec00cf205d16881d588/Institutional-effects-on-economic-performance-in-post-socialist-transition-a-dynamic-panel-analysis.pdf
Efendica A, Pughb G, Adnettb N (2010) Institutions and eco-nomic performance: System GMM modelling of institutional effects in transition http://www.efsa.unsa.ba/~adnan.efen-dic/materijali/Efendic%20et%20al.%202010%20INSTITU-TIONS%20IN%20TRANSITION.pdf
Eicher T, Schreiber T (2010) Structural policies and growth: time series evidence from a natural experiment. Journal of Development Economics 91 (2010): 169-179. https://doi.org/ 10.1016/j.jdeveco.2009.05.003
Elert N, Halvarsson D (2012) Economic freedom and institutional convergence. Ratio Working Paper No. 196, November 27, 2012http://ratio.se/app/uploads/2014/11/ne_dh_-working_paper_200_elert_trippleh.pdf
Hájek Ja, Hoeschle F, Bilan Yu, Strielkowski W (2016) Economic performance and convergence in the Eurozone. Marketing and Management of Innovations 1: 206-223.
Hall JC (2015) Institutional convergence: Exit or voice? West Virginia University. September 2015 http://busecon.wvu.edu/phd_economics/pdf/15-40.pdf
Harold, N Ng Yan (2018) Econometric analysis of long and short-run effects of exports on economic growth in Cameroon (1980–2016). Financial Markets, Institutions and Risks 2 (1): 50-57. https://doi.org/10.21272/fmir.2(1).50-57.2018
Harshad D (2017a) An іnquiry on social issues − Part 1. Business Ethics and Leadership 1 (2): 78-87. Harshad D (2017b) An inquiry on social issues − Part 2. Business Ethics and Leadership 1 (3): 45-63. https://doi.org/10.21272/bel.1(3).45-63.2017
IMF (2005) World Economic Outlook, September 2005: Chap-ter 3. Building. Institutions – IMF https://www.imf.org/en/Publications/WEO/Issues/2016/12/31/World-Economic-Outlook-September-2005-Building-Institutions-18303
Jayasundera M (2017) Ancient Sri Lankan Economic Systems. Financial Markets, Institutions and Risks 1 (4): 24-27. https://doi.org/10.21272/fmir.1(4).24-27.2017
Jovovic R, Draskovic M, Delibasic M, Jovovic M (2017) The concept of sustainable regional development – institutional aspects, policies and prospects. Journal of International Studies 10 (1): 255-266. https://doi.org/10.14254/2071-8330.2017/10-1/18
Kaasa A, Kaldaru H, Parts E (2007) Social capital and institutional quality as factors of innovation: Evidence from Europe ftp://ftp.repec.org/opt/ReDIF/RePEc/mtk/febpdf/febawb55.pdf
Kaasa A (2016) Social capital, institutional quality and produc-tivity: Evidence from European Regions. Economics and Sociology 9 (4), 11-26/9-4/1.Kandil M (2009) Determinants of institutional quality and their impact on economic growth in the MENA region. Interna-tional Journal of Development Issues 8 (2): 134-167. https://doi.org/10.1108/14468950910997693
Kaufmann D, Kraay A, Mastruzzi M (2010) The Worldwide Governance Indicators: Methodology and Analytical Is-sues. Policy Research working paper; no. WPS 5430. World Bank. © World Bank https://openknowledge.worldbank.org/handle/10986/3913 License: CC BY 3.0 IGO
Iqbal K (2018) Human development and economic growth in Pakistan. SocioEconomic Challenges 3 (2): 66-75. https://doi.org/10.21272/sec.3(2).66-75.2018
Kostel M, Leus D, Cebotarenco A, Mokrushina A (2017) The sustainable development goals for Eastern partnership coun-tries: Impact of institutions. SocioEconomic Challenges 1 (3): 79-90. https://doi.org/10.21272/sec.1(3).79-90.2017
Kyrychenko K, Samusevych Y, Liulova L, Bagmet K (2018) Innovations in country’s social development level estima-tion. Marketing and management of innovations (2): 113-128. https://doi.org/10.21272/mmi.2018.2-10
Logan W, Esmanov O (2017) Public financial services transpar-ency. Business Ethics and Leadership 1 (2): 62-67. https://doi.org/10.21272/bel.1(2).62-67.2017
Lunyakov OV, Vasilyeva TA, Leonov SV (2013) Analysis of inter-nal and external imbalances in the financial sector of Ukraine’s economy. Actual Problems of Economics 12 (150): 176-184.
Melnyk L, Sineviciene L, Lyulyov O, Pimonenko T, Dehtyarova I (2018) Fiscal decentralization and macroeconomic stability: The experience of Ukraine’s economy. Problems and Perspectives in Management 16 (1): 105-114. https://doi.org/10.21511/ppm.16(1).2018.10
Pagano U (2011) Interlocking complementarities and institutional change. Journal of Institutional Economic 7 (3): 373-392. https://doi.org/10.1017/S1744137410000433
Pilia G (2017) Estonia and Lithuania in transition: A compared analysis of the change and its costs and benefits. Business Ethics and Leadership 1 (2): 12-19. https://doi.org/10.21272/bel.1(2).12-19.2017
Redek T, Susjan A (2005) The impact of institutions on economic growth: The case of transition economies. Journal of Eco-nomic Issues XXXIX (4): 995-1027. https://doi.org/10.1080/00213624.2005.11506864
Rivera Rios MA, Lujano Lopez JB, Garcia Veiga J (2018) The fifth global kondratiev. Low economic performance, instability and monopolization in the digital age. Marketing and Management of Innovations (2): 270-291.
Rogowski R (2017) Theoretical reasons for economic sociol-ogy. SocioEconomic Challenges 1 (4): 45-49. https://doi.org/10.21272/sec.1(4).45-49.2017
Schönfelder N, Wagner H (2018) Institutional convergence in Eu-rope. Discussion Paper No. 2018-53. July 02, 2018 http://www.economics-ejournal.org/economics/discussionpapers/2018-53
Shvindina H (2017) Leadership as a driver for organizational change. Business Ethics and Leadership 1 (1): 74-82. https://doi.org/10.21272/bel.2017.1-09
Tamilina L, Tamilina N (2014) Heterogeneity in institutional ef-fects on economic growth: Theory and empirical evidence. European Journal of Comparative Economics 11 (2): 205-249.
Tamilina L, Tamilina N (2017) Post-communist transition as a path break: Comparing legal institutional effects on economic growth between path-breaking and path-drifting institutional reforms. The Journal of Applied Economic Research 11 (3): 315-347. https://doi.org/10.1177/0973801017703513
Valeriani E, Peluso S (2011) The impact of institutional quality on economic growth and development: An Empirical Study. Journal of Knowledge Management, Economics and Informa-tion Technology 6.
Vasilyeva T, Lyeonov S, Adamičková I, Bagmet K (2018a) Insti-tutional quality of social sector: the essence and measure-ments. Economics and Sociology 11 (2): 248-262. https://doi.org/10.14254/2071-789X.2018/11-2/17
Vasylieva T, Lyeonov S, Lyulyov O, Kyrychenko K (2018b) Mac-roeconomic stability and its impact on the economic growth of the country. Montenegrin Journal of Economics 14 (1): 159-170. https://doi.org/10.14254/1800-5845/2018.14-1.12
Vitola A, Senfelde M (2015) The role of institutions in economic performance. Business: Theory and Practice 16 (3): 271-279. https://doi.org/10.3846/btp.2015.498
WEF (2018) Klaus Schwab, World Economic Forum. The Global Competitiveness Report 2017–2018 http://www3.weforum.org/docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf
Williams A, Siddique A (2008) The use (and abuse) of governance indicators in economics: a review. Economics of Governance 9: 131. https://doi.org/10.1007/s10101-006-0025-9
Yevdokimov Y, Melnyk L, Lyulyov O, Panchenko O, Kubatko О(2018) Economic freedom and democracy: Determinant factors in increasing macroeconomic stability. Problems and Perspectives in Management 16 (2): 279-290. https://doi.org/10.21511/ppm.16(2).2018.26