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Poverty: Theory and Practice. Contribution of Abhijit Banerjee and Esther Duflo

Poverty: Theory and Practice. Contribution of Abhijit Banerjee and Esther Duflo

Journal of Institutional Studies, , Vol. 12 (no. 1),

The article is devoted to the theory and practice of combating poverty, starting from G. Myrdal and A. Deaton and ending with A. Banerji and E. Duflo. The population explosion in developing countries exacerbated the problem of poverty, as it contributed to a sharp reduction in mortality and an increase in life expectancy of the population. As a result, many scholars began to study ways and methods to narrow the gap that exists in per capita consumption of the poor and rich countries. A special section is devoted to the experience of Grameen Bank in the use of microcredit to combat poverty in Bangladesh. The works of A. Banerji and E. Duflo took this experience into account, but were not limited to it and found new methods to increase the effectiveness of the fight against poverty. In the center of research of Nobel laureates, not questions of theory, but questions of practice. To this end, they use a randomized trial approach. Since it is very difficult to set up a controlled experiment, scientists are forced to rely mainly on observations. To this end, they compare the results of the control sample with the sample in which the experiment takes place. The focus of their study is the effectiveness of the assistance provided by international organizations to developing countries. In particular, the new Nobel laureates prove that the means to combat poverty must be sought together with the recipients of this assistance. This allows to dramatically increase its effectiveness. As a result, at the end of the XX - beginning of the XXI centuries, certain successes were achieved in this direction as the total number of people living below the poverty line decreased by 750 million people.

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Evolutionary Economics at the Peak and in Crisis: Prospects for the New Paradigm

Evolutionary Economics at the Peak and in Crisis: Prospects for the New Paradigm

Journal of Institutional Studies, , Vol. 12 (no. 1),

Modern evolutionary economics is in the ripening phase and at the same time demonstrates clear signs of an internal crisis. Having become one of the main pillars of economic heterodoxy, this scientific community still does not have a common methodological framework, an agreed research program and a system of normative settings. Indirectly responding to this crisis, a group of leading evolutionists led by Richard Nelson in the book «Modern Evolutionary Economics: An Overview» (2018) suggests moving from direct competition with the neoclassical mainstream to a compromise solution. The compromise is to complement neoclassicism with implicit evolutionary thinking, i.e. adoption of the thesis “history matters” as the basic premise of analysis, even when studying economic phenomena in statics. Similar crisis processes (and attempts at compromise solutions) are now observed in neoinstitutional theory - the mainstream of modern institutionalism - especially in the field of studying the evolution of institutions. The author, as a representative of post-institutionalism, argues that these crises are based on the exhaustion of the potential of the neo-Darwinist paradigm as a source of conceptual metaphors for studies of the economic and social evolution. Overcoming the paradigmal crisis requires going beyond the prevailing (and already dogmatized) metaphors. The necessary conditions have formed for this step: a paradigm shift is taking place in modern biological science – an extended evolutionary synthesis is taking the place of neo-Darwinism, the «core» of which is evolutionary developmental biology (Evo-Devo). In this regard, evolutionary economists have the opportunity to update the basic methodological «settings» by moving from neo-Darwinist metaphors to metaphors of the Evo-Devo. The article presents three complex priority tasks related to the implementation of the Evo-Devo paradigm. First, the rejection of any version of reductionism, in particular from mono-aspect, monocausal and dichotomous thinking. Secondly, the rejection of the optimization and dysfunctional approaches with the transition to bricolage thinking, based on a positive perception of the organic imperfection of economic institutions, mechanisms and systems. Thirdly, the addition of the traditional systemic approach to assemblage thinking with an emphasis on hybrid systems, the multiplicity of their logics and the inevitability of their conflicts. It is shown that the Evo-Devo paradigm allows a more adequate explanation of the evolution of the irreducible complexity of economic systems.

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Consumers' Diligence as a Natural Way to Cope with Externalities: from the Coase Theorem to the Invisible Hand

Consumers' Diligence as a Natural Way to Cope with Externalities: from the Coase Theorem to the Invisible Hand

Journal of Institutional Studies, , Vol. 12 (no. 1),

The paper reconsiders the traditional approach to the productivity of labor based on the axiom of the diminishing efficiency. The S-shape of the productivity curve appears because the labor consists of high-productive industry and low-productive diligence, which implies efforts that increase the quality and support the market value of an item. This optics becomes valuable when the quantity demanded doesn’t represent trade units, cars and apartments, but units of consumption, mileage and nights, as it takes place in the sharing economy. The low-productive diligence of the after-purchase careful use becomes the focal point of the analysis of the equilibrium price dispersion where the utility needs efforts to be derived. The model of the optimal search demonstrates that the increase in productivity of labor raises the need of buyers in such efforts per unit of consumption that reveals the loss in the quality of purchased items, i.e., trade units, cars and apartments. The diligence is also increasing under the negative externalities, which are decreasing purchase price with regard to the equilibrium price. However, the diligence activates the Coase theorem and moves assets to their efficient use at the equilibrium price level. The redistribution of assets goes from zero to the positive willingness to take care of an asset, from low or slight diligence to great or high diligence. Although the common law describes different degrees of diligence, the measurability of diligence looks unrealistic that proves the idea of the “invisible hand”, which regulates the exchange.

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Institute of Social Inequality and Economic Growth

Institute of Social Inequality and Economic Growth

Journal of Institutional Studies, , Vol. 12 (no. 1),

The article considers the impact of income inequality on investment activity and economic growth. The transmission mechanism between inequality and growth is the basic psychological law of accumulation, formulated by J. M. Keynes. The formalization of Keynes' law allows to obtain analytical expressions for investment volumes for a homogeneous society in which all agents have equal incomes, and a heterogeneous society in which there are two social groups – the poor and the rich. These constructions are the basis of the theorem on the investment dominance of a heterogeneous society, which in case of weak operation of Keynes' law and with a sufficiently high income inequality, a heterogeneous society generates more investment in the national economy than a homogeneous one. Thus, if the investment preferences of the rich layer are weak, there is a lower limit of inequality, which contributes to the growth of investment activity. Experimental calculations have shown that in practice, this lower bound of inequality is usually symbolic. At the same time, with the strong effect of Keynes' law, the investment gain of a heterogeneous society becomes so tangible that it could become an important factor in overcoming the Malthusian trap and moving to a stable trajectory of economic growth. It is also proved that in conditions of weak action of the basic psychological law of accumulation, economic growth takes place only at a sufficiently high level of social inequality. Empirical verification has shown that even in this case, the lower limit of inequality is not burdensome, and, on the contrary, when Keynes' law is strongly manifested, the growth of inequality has a very powerful effect on increasing the rate of economic growth. Examples and illustrations of these effects explain the paradox associated with the presence of strong inequality during the Malthusian trap against the background of lack of economic growth.

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Frightening Spirit and Its Mediums (is the "Protestant Ethic" Relevant in the XXIst Century?)

Frightening Spirit and Its Mediums (is the "Protestant Ethic" Relevant in the XXIst Century?)

Journal of Institutional Studies, , Vol. 12 (no. 1),

The author attempts to answer the question: how relevant is the paradigm associated with the name of M. Weber, in which the development of capitalism is dependent on religious ethics? The article makes a distinction between the “spirit” of capitalism described by Weber and Zombart and the teachings of religious or other nature, which are ideologies that “justify involvement in capitalism”. The author describes such ideologies as intermediaries (mediums) between the “pure” spirit of capitalism that causes rejection and the entrepreneur or employee. One can see that they meet the objective needs of early capitalism in the promotion of value systems that maximally justify free labor for hired workers. Thus, they are trying to reduce the degree of commodification of labor by changing workers motivation to relatively non-“materialistic”. Protestantism turned out to be such a system of values in a certain historical period, which in many ways was a reaction to “revolution of diligence” and consumption of that period. The article substantiates that another religious, ethical and other teachings currently play the same role of the medium. Protestantism was just the first of them. This is the most significant of the revealed by M. Weber in the “Protestant Ethic”, which retains its relevance even now – but at a price of actually denying the unique role of Protestantism specifically.

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Institutional Component of Production Costs

Institutional Component of Production Costs

Journal of Institutional Studies, , Vol. 12 (no. 1),

In neoclassical theory, the value of production costs is determined by technology, subjective preferences, and the prices. The size and structure of production costs are "institutionally neutral". The costs and benefits of economic behavior are formed not only as a result of the interaction between factors of production or the game of prices, but also as a result of the institutional structure of social interactions. The result of social action is the emergence of institutional costs for the participants of production, which are based on the restriction of access to goods that have direct utility for the individual. These costs are added to the costs associated with technology and the structure of equilibrium prices and change the relative value of the relationship between costs and benefits in alternative economic behaviors. This has the effect of changing the size and structure of production costs, as well as the limit to which people are willing to bear costs. The institutional structure of social interaction affects the change in the value of transformational costs in the following forms: the change in the value of costs necessary to create a unit of income and the possibility of "moving costs"; the level of unproductive expenditure of resources; institutions act as a factor whose state has a significant impact on the normative value of production costs, are a social productive force. The function of institutions cannot be limited to minimizing transaction costs. The criterion for the effectiveness of the institutional structure of the economy is not only the amount of transaction costs, but also the amount of transformation costs.

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Threats and Risks of Intellectual Security in Russia in the Conditions of World Globalization

Threats and Risks of Intellectual Security in Russia in the Conditions of World Globalization

Journal of Institutional Studies, , Vol. 12 (no. 1),

World economy is undergoing constant globalization and internalization which can be seen in public life. However, the crucial place in all these processes is taken by the international labour migration. As a result, and an obvious outcome, comes the migration of scientists and highly-qualified specialists as well as the phenomenon called “brain drain”. Our paper studies these processes and points out at the inconsistences that emerge in the assessment of emigration of researchers and highly qualified specialists as well as in measuring the impact of “brain drain” on the state’s intellectual security. Due to the political economy and institutional aspects of these issues, they attract attention of the general public and mass media. Our results confirm that this might be due to the fact that are not enough research analytical works devoted to studying these processes and their effects for regional development. In addition, there is a shortage of approaches to studying the outcomes of “brain drain” and intellectual migration in general international migration that emerged in the 1990s. Thence, we show that there is not enough evidence for evaluating the inter-dependence between “brain drain” and intellectual security and regional development.

Views: 257

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Institutional Quality and the Fight of the G20 Leaders for the International Agenda in Print Media

Institutional Quality and the Fight of the G20 Leaders for the International Agenda in Print Media

Journal of Institutional Studies, , Vol. 12 (no. 1),

This article analyzes the influence of economic and political institutions on the attention of the leading print media of the G20 countries to political leaders. Based on the Factiva database which indexes publications from 35 000 mass media of 159 countries of the world, we collected the database on the number of mentions of country leaders in the five leading publications of all the countries of the G20 for 2018. In addition, we use the Institutional Quality Index data to assess the quality of institutions in the countries we study. In this study we use the theory of global news flow and the concept of political personalization. We show that attention to the leaders of countries with good economic institutions is higher than to the leaders of countries with poor economic institutions. However, the relationship with political institutions is the opposite: more attention is given to the leaders of countries with law-quality political institutions. In addition, the results show that the media of countries with more developed economic institutions are less likely to mention leaders of countries with less developed economic institutions. But for the differences in political institutions the situation is the opposite: the media of countries with more developed political institutions more often mention leaders of countries with poor political institutions. We can conclude that the leaders of authoritarian countries seek to participate in the formation of the agenda and achieve a higher level of self-attention despite economic factors. This study complements the theory of global news flow by indicating that political factors are no less important in shaping the international media agenda than the economical factors.

Views: 193

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Changes in the Russians’ Strategies of Socio-Economic Adaptation in the Late XX – Early XXI Centuries

Changes in the Russians’ Strategies of Socio-Economic Adaptation in the Late XX – Early XXI Centuries

Journal of Institutional Studies, , Vol. 12 (no. 1),

The study is devoted to the analysis of changes in adaptation strategies of Russians over the past 30 years. According to the analysis of the Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences’ data, the widespread adaptation strategies were shaping most actively in the 1990s, when new institutional conditions forced individuals to look for new ways for maintaining the material wellbeing of their households or even for surviving. It is also shown that the growth of real incomes in the 2000s led to a slight increase in the number of those who have successfully adapted to new conditions and could afford nothing more to do to improve their financial situation, but even in 2018, there were only 16% of the population. With regard to active forms of socio-economic adaptation, the article shows that by the end of the second decade of the XXI century, the shift of dominance in the relations of workers and employers towards the latter led to a reduction in supporters of strategies related to the labor market, due to a decrease in their effectiveness. It is concluded that the process of socio-economic adaptation of Russians to the current system of social relations in the country is still ongoing. And although it is quite intense, its vector is opposite to many of the tasks facing the country now, in particular-the course of “technological breakthrough”.

Views: 166

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Conflict Resolution Practice in Public Procurement: an Empirical Study

Conflict Resolution Practice in Public Procurement: an Empirical Study

Journal of Institutional Studies, , Vol. 12 (no. 1),

This paper, based on a large-scale online survey of suppliers conducted by the HSE IIMS in 2017, analyzed various conflict resolution strategies in public procurement. The specific feature of this sphere is the presence of the state as the dominant party in the contractual relationship and the resulting differences in assessing the chances of protecting one’s interests in court as well as the effectiveness of judicial conflict resolution mechanisms. At the same time, we proceeded from the fact that suppliers differ not only in their practice of resolving conflict situations after the conclusion of a contract but also in the type of behavior that determines the choice of each strategy. The survey results showed that the majority of suppliers prefer to resolve conflicts in public procurement using an out-of-court negotiation with customers, while only 31% of respondents resort to judicial proceedings. In addition, 37% of respondents prefer resolving public procurement conflicts exclusively by negotiations an only 4% use only the judicial system. Approximately one third of the respondents abide by the “conflict-free” strategy and a slightly lower number of suppliers (27%) use a hybrid strategy that includes both methods of conflict resolution in public procurement. At the same time, suppliers strongly involved in public procurement with stable informal relations with customers are less likely to go to court and less often use negotiations. The paper will provide possible explanation for the revealed patterns in the behavior of suppliers.

Views: 199

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