Non‐Market Institutions in Economic Development: The Role of the Third Sector

In an article published in this journal in 2005, Dorward et al. argued that non‐market institutions are particularly effective in addressing market failures in the high‐transaction cost institutional environment which is often characteristic of low‐income countries. This comment develops additional theoretical underpinnings of this argument by exploring differences in the capacity for addressing market failure of for‐profit firms, on the one hand, and third sector organizations representing a major type of non‐market institutions, on the other. It is argued that while for‐profit firms address market failures by facilitating market exchange, third sector organizations do so by replacing exchange with self‐sufficiency. This recourse to self‐sufficiency is reflected in the important role of third sector organizations in economic development in low‐income countries.     

Integration Processes in European Research and Development: A Comparative Spatial Interaction Approach Using Project Based Research and Development Networks,Co‐Patent Networks and Co‐Publication Networks

This study focuses on integration processes in European Research and Development (R&D) by analyzing the spatiotemporal dimension of three different R&D collaboration networks across Europe. The studied networks cover different types of knowledge creation, namely project‐based R&D networks within the European Union (EU) Framework Programmes (FPs), co‐patent networks, and co‐publication networks. Integration in European R&D—one of the main pillars of the EU Science Technology and Innovation policy—refers to the harmonization of fragmented national research systems across Europe and to the free movement of knowledge and researchers. The objective is to describe and compare spatiotemporal patterns at a regional level and to estimate the evolution of separation effects over the time period 1999–2006 that influence the probability of cross‐region collaborations in the distinct networks under consideration. The study adopts a spatial interaction modeling perspective, econometrically specifying a panel generalized linear model relationship, taking into account spatial autocorrelation among flows using eigenfunction spatial filtering methods. The results show that geographical factors are a lower hurdle for R&D collaborations in the FP networks than in co‐patent networks and co‐publication networks. Furthermore, it is shown that the geographical integration is higher in the FP network.     

Institutions,Incentives, and Policy Entrepreneurship

Policy entrepreneurship is often used to explain agenda setting through reference to the behavior of individual “change agents.” But there are still gaps in our understanding of what motivates entrepreneurs. Rational choice theory emphasizes the importance of material and nonmaterial incentives; however, it remains unclear what role institutions play. This article aims to empirically examine the relationship between incentives and institutional encouragement of innovation. Using a case study of the federal government of Canada, I find evidence that incentives matter. Government agencies with many incentives are more likely to encourage innovation than agencies with few incentives. These results underscore the importance of institutions in determining the motivations of policy entrepreneurs, and suggest future research should focus on the interplay among individual, political, and institutional factors.     

Economic Development and Poverty Reduction in Korea: Governing Multifunctional Institutions

Combining economic development and poverty reduction is a challenge for developing countries. In the search for mechanisms that integrate both goals, this article examines the Republic of Korea's development strategy, which transformed one of Asia's poorest nations into an industrialized country with low levels of poverty. The authors investigate the state–society nexus in which Korea's developmental state has operated and look at the role of governance for economic development, focusing especially on multifunctioning institutions performing for economic growth and poverty reduction. The article provides strategic suggestions for developing countries on managing effectively within institutional constraints and moving beyond a simple emphasis on good governance.     

Policy Theory, Policy Theory Everywhere: Ravings of a Deranged Policy Scholar

The field of policy theory abounds with numerous theories, with each theory having a set of practitioners that are working independently of the others. Resolving conflicts among policy theories as a result is difficult. This essay has a more modest goal of posing some questions and suggesting some avenues for future research. Key points include defining the purpose of policy theory, incorporating management into our theories, making strategic choices about areas of study, addressing the parsimony-comprehensiveness tradeoff, and providing a more nuanced role for institutions.     

Markets,Transaction Costs and Institutions: Compensating for Nuclear Risk in Japan

This article explores the nature, role and effectiveness of compensation mechanisms in managing the political constraints to the siting or development of nuclear projects in Japan. Statistical analysis reveals that the relationship between compensation and income is a key dynamic characterising the history of the marketplace for nuclear facilities in Japan. The commodification and trading of risks for benefits is governed by a sophisticated institutional and policy framework which acts to lower the transaction costs of market exchange. The interaction between the market and the institutional dynamic has generated a curious pattern of both NIMBY ('not in my backyard') and YIMBY ('yes, in my backyard') responses to nuclear development in Japan.     

Governance,Policy Innovation,and Local Economic Development in North Carolina

This article examines the extent to which local governments in North Carolina embrace innovation in their economic development activities. The study makes a distinctive theoretical contribution by examining the relationship between innovation in how economic development policies are administered and implemented (using concepts associated with governance and NPM), and innovation in what is substantively done (policy innovation). An analysis of the results from a statewide survey of local governments in North Carolina finds that certain governance/management variables are significant determinants of economic development policy innovation. An implication of this finding is that new ways of doing economic development may go hand‐in‐hand with new ways of governing and managing. Many of the governance/management variables are also positively associated with the use of a greater number of traditional economic development strategies and tools. This suggests that local governments may find it helpful to be innovative in how they implement economic development irrespective of the substantive policy orientation of particular strategies and tools.     

Conservation Narratives in Costa Rica: Conflict and Co‐existence

This article examines narratives about nature conservation in Costa Rica, specifically those related to wildlife and biodiversity, and their evolution with the growth of tourism and bioprospecting industries. It outlines a traditional conservation narrative and two streams of an emerging counter‐narrative, and discusses problems and prospects for each in contemporary Costa Rica. The use of narrative and counter‐narrative follows Roe (1991, 1995), Fairhead and Leach (1995), and Leach and Mearns (1996). The article focuses particularly on the ways in which the narratives are increasingly drawing on, informing, and sometimes conflicting with one another; it is based on the author’s research undertaken in various protected areas in Costa Rica since 1994 and on research published by others.     

Economic and Environmental Policy Analysis of the Flumen‐Monegros Irrigation System in Huesca,Spain

This article describes a behavioral model of the Flumen‐Monegros irrigation area (Spain) and presents the results from the model simulation under various policy scenarios. The model combines agronomic, economic and policy information in a framework built using linear programming and crop growth simulation techniques. An important feature of the model is the classification of crop acreage in various types of soils which have different productive potential. The objective function maximizes net margins of crops and includes direct payments of the Common Agricultural Policy (CAP). The crop activities covered in the model are the main crops cultivated in the area (fallow, wheat, barley, corn, sunflower, alfalfa, rice, other crops, and CAP set‐aside). To validate the model, the results on cropland utilization obtained from the model have been compared with actual cropland utilization, concluding that the model closely approximates the actual data. The model is used to characterize the behavior of the irrigation area under three scenarios which reflect likely changes in agricultural and environmental policies: removal of direct payments, increase in water prices, and reduction of fertilizer use. The results show the large impact of these three scenarios on farmers' production decisions: the elimination of direct payment reduces net margin almost by half; prices corresponding to full recovery of water costs reduce significantly the cultivated acreage; and the reduction in fertilizer use causes a fall of 23 percent in net margins.     

Institutions, Bureaucratic Decisions, and Policy Outcomes: State Insurance Solvency Regulation

Although over the past 2 decades several scholars have documented a link between institutional arrangements and policy choices, few studies have demonstrated how different institutional arrangements give rise to different policy outcomes. Further, although some studies have related bureaucratic resources to policy decisions, almost none have illustrated that the way state agencies actually deploy regulatory resources—policy outputs—significantly influences policy outcomes. Focusing specifically on the insurance industry in the United States, in this article we illustrate the impact of state regulatory activities on the solvency of firms in the insurance industry from 1987 to 1997, and in doing so we emphasize the differences between policy outputs and policy outcomes. In the case of policy outputs, for example, we find that elected insurance commissioners, divided state government, budgetary resources, and larger insurance sectors lead to more aggressive solvency examinations of insurers. In addition to examinations, however, we discern an important role for both regulatory and political institutions in subsequent insurer insolvencies.     

A Behavioral Theory of Policy Feedback in Tobacco Control: Evidence From a Difference‐In‐Difference‐In‐Difference Study

Public policy scholars argue that in highly tangible policies, such as tobacco control, the public learns from the direct experience of the beneficial effects of the policy. Empirical evidence supports this argument, suggesting that in the United States the introduction of tobacco control measures makes people more inclined to further regulation. By relying on a set of cases which allows testing the effects of the introduction of tobacco control measures across European countries on a series of relevant variables, this study confirms that the introduction of tobacco control measures makes the public more inclined to further regulation. Yet, when the effects of these policies are disaggregated between smokers and nonsmokers, results show that these positive effects are driven by smokers. This puzzle suggests that different effects than mass attitudinal policy feedback effects, driven by learning from direct experience, might explain the positive reaction to tobacco control. This study puts forward a behavioral theory of policy feedback, which suggests that smokers react positively to the introduction of tobacco control measures because they see these measures as commitment devices, which can help them quit smoking. Evidence for this argument is found by demonstrating that the introduction of tobacco control measures increases smokers’ welfare.     

Sector‐Specific Development and Policy Vulnerability in the Philippines

Why does a state build institutional capacity in certain sectors rather than others? Despite having gained leverage explaining the emergence of institutions in the developmental states of East Asia, we have comparatively weak accounts for sub‐national variation in institutional strength, a much more common phenomenon. Investigating the surprising achievements of the Philippines’ National Irrigation Administration, this article advances a theory of sectoral success in the face of a generally poor developmental record. The author demonstrates that executives will only construct institutional capacity when facing strong political pressure combined with resource scarcity. Such vulnerability permits politicians to exercise discretion in choosing which policies to pursue, allowing them to avoid upsetting their coalitions. Once a politician achieves some degree of policy success, he or she is then able to avoid engaging in similar reforms in other fields. Thus we see pockets of institutional capacity in states that otherwise struggle with developmental tasks.