Leaving the Nest: The Rise of Regional Financial Arrangements and the Future of Global Governance

This article examines the impact of regional financial arrangements (RFAs) on the global liquidity regime. It argues that the design of RFAs could potentially alter the global regime, whether by strengthening it and making it more coherent or by decentring the International Monetary Fund (IMF) and destabilizing it. To determine possible outcomes, this analysis deploys a ‘middle‐up’ approach that focuses on the institutional design of these RFAs. It first draws on the rational design of institutions framework to identify the internal characteristics of RFAs that are most relevant to their capabilities and capacities. It then applies these insights to the interactions of RFAs with the IMF, building on Aggarwal's (1998) concept of ‘nested’ versus ‘parallel’ institutions, to create an analytical lens through which to assess the nature and sustainability of nested linkages. Through an analysis of the Chiang Mai Initiative Multilateralization (CMIM) and the Latin American Reserve Fund (FLAR), the article demonstrates the usefulness of this lens. It concludes by considering three circumstances in which fault lines created by these RFAs’ institutional design could be activated, permitting an institution to ‘leave the nest’, including changing intentions of principals, creation of parallel capabilities and facilities, and failure of the global regime to address regional needs in a crisis.     

Planning reform and development rights in Greece: institutional persistence and elite rule in the face of the crisis

This paper discusses the process of development rights allocation in Greece and the changes to that process which occurred from 2009 onward. It argues that the interaction of institutions which regulate the allocation of development rights, with social practices of formal and informal land development, gives rise to development pathways which demonstrate institutional persistence. In the case of Greece, these pathways range from ‘urban development by state organisations’, to development without planning permission on land that is not owned by the developer. The crisis was a shock to the Greek governance system, yet the analysis in this paper shows that the reforms of the development rights allocation process followed the pre-existing ‘mentality of rule’. The paper therefore argues that development pathways reflect a political arrangement between the ruling elites and other social strata. The technologies of governance and the associated institutions and practices which support elite rule, were sustained, if not reinforced, during the crisis. This analytical approach therefore offers insights of relevance to other countries in Europe and around the world which contemplate reforms to their development rights allocation system.     

Of Vines and Policy Vignettes: Sectoral Evolution and Institutional Thickness in the Languedoc

We argue that the search for rural regimes in particular localities can be usefully advanced through the deployment of a sensitive and suitably nuanced conceptualization of institutional thickness. Empirical validation of this theoretical framework with reference to Languedoc viticulture offers substantial evidence of the interdependency between regime building maintenance and stability, and local institutional integrity. The theoretical framework developed here, based on the notions of consensus and concrete institutions , also provides an analytically rigorous approach for understanding the complex rescaling of the political economy of rural governance, not least by offering some indication of the scalar rationale for consensus compatibility and partnership building between elites situated at different politico-geographic scales. We contend that an understanding of this shared logic of action among local and extra-local administrative and political elites is crucial to the restructuring process unfolding in European rural regions.     

The Eurozone crisis and Italian corporate governance: the end of blockholding?

This article explains the process of change in domestic corporate governance. An actor-centred coalitional approach is applied to the Italian case to show how the main features of domestic corporate governance are a product of behavioural patterns (i.e. informal institutions), rather than formal legislation. Leveraging their superior financial means, business elites act as institutional incumbents shaping these informal institutions according to their preferences. It is argued that a change in corporate practices is more likely to be triggered by a socio-economic crisis, which weakens the domestic elite’s influence, rather than a legal reform. These findings call into question the excessively formalistic approach of many corporate governance scholars, and are confirmed by the Italian trajectory. After having resisted 20 years of liberalising legal reforms aimed at eroding their power, Italian blockholders are now being forced, as a consequence of the Eurozone sovereign debt crisis, to dismantle their cross-shareholding networks.     

Continuity,Discontinuity and Incoherence in the Bretton Woods Order: A Hirschmanian Reading

This article examines the effects of the Asian crisis and especially the global financial crisis on developmental finance (that is, long‐term project finance and counter‐cyclical liquidity support) and the global financial architecture. In this connection three claims are advanced. The first is positive: that the crises occasioned meaningful although ad hoc, uneven discontinuities. The conjunction of discontinuities and continuities is imparting incoherence to the developmental and global financial architecture. The second claim is normative and controversial. Contrary to the common narrative, emergent incoherence is (on balance) productive of development and stability rather than debilitating. Actors in parts of the global South and East enjoy greater opportunities for institutional experimentation today in comparison with the limited space available in the coherent neoliberal era when the Bretton Woods institutions were monolithic. All of the experiments underway are not equally likely to survive, but even failures can provide lessons and networks that contribute to future successes. Emergent redundancy and new networks of institutional cooperation increase financial resilience. The article also explores the risks of incoherence and redundancy. The third claim is that productive incoherence can be understood within a ‘Hirschmanian mindset’ — an understanding of change and development informed by Albert Hirschman's theoretical and epistemic commitments.     

Economic Restructuring,Coping Strategies and Social Change: Implications for Institutional Development in Africa

Since the early 1980s, most African countries have experienced unsatisfactory rates of economic growth and profound changes in livelihood systems, which have affected the way their modern institutions function. However, when confronted with evidence of poor economic performance in countries undergoing adjustment, the international financial institutions often blame governments for their lack of political will in regulating the activities of bureaucrats and vested interests. They recommend policies aimed at restructuring public sector institutions through privatization, public expenditure cuts, retrenchment, new structures of incentives and decentralization. Despite efforts to implement these measures in a number of countries, the problems of low institutional capacity remain. Two key contradictions appear to explain why institutions have been largely ineffective in crisis economies in Africa: the growing contradiction between the interests of bureaucratic actors and the goals they are supposed to uphold; and the contradiction between the institutional set-up itself and what goes on in the wider society. To understand how these contradictions work, it is necessary to look more closely at the set of values and relationships that anchor institutions on social systems. The issues here are social compromise and cohesion; institutional socialization and loyalties; overarching sets of values; and political authority to enforce rules and regulations. The crises in these four areas of social relations, which are linked to the ways households and groups have coped with recession and restructuring, have altered Africa's state institutions so that it has become difficult to carry out meaningful development programmes and public sector reforms without addressing the social relations themselves.     

Understanding large-scale institutional change

A remarkable reform in modern Swedish political history was the transformation of the local government structure between 1952 and 1974. In a mere 22 years, the number of municipalities was reduced from 2,498 to 277. This study aims to answer how such large-scale reforms could come about politically, particularly since much of the literature on institutions and political reform asserts that carrying out large-scale political change should be a difficult task. Two opposing stories of institutional change are presented: evolutionary accounts, which see the amalgamations as rational adaptations to changing circumstances, are contrasted with a social conflict perspective, which explains amalgamations in terms of their distributional consequences. By investigating the processes leading up to this vast restructuring of Swedish local political geography, we demonstrate that an understanding of these reforms as rational adaptations to changing circumstances, made on the basis of consensus among leading political actors, is not accurate. The reforms were not as uncontroversial and non-conflictual as they often have been portrayed. Our results weaken the evolutionary approach to institutional change, whilst supporting the social conflict perspective.     

Information without frontiers: Financial services,EC regulation and European cities

Using Castells' notion of the informational mode of development, this briefing investigates the changing hierarchy and function of European cities in the light of EC policies. The EC regulatory regime is identified as an integral part of the informational mode of development, setting the parameters within which the corporate sector operates. It is argued that the purpose of information flows is mainly control. A new constellation of European cities is anticipated which depends to a large extent upon the degree to which cities, competing against one another, are able to establish central urban complexes. These are based on the agglomeration economies between corporate headquarters, financial institutions and producer services at the urban level, and information flows at a global level of communications. Among the vast array of EC policies the paper identifies those in support of innovation and telecommunications, the deregulation of financial services, and regional policy as crucial for urban development. Given the requirements of infrastructure, institutions, professional skills and regulatory competence, existing metropolitan centres will capitalize on their comparative advantage and attempt to build on these in the future. These developments are likely to foster further concentration of capital and investment in a few major centres, thus counteracting other EC policies of regional equalization and harmonization. It is argued that these and other contradictions are an amplification of those already afflicting the capitalist state at both national and local levels. The paper also offers an opportunity to reassess aspects of traditional location theory, in particular central place models, in the light of these developments and finds them wanting. The same conclusion is reached regarding the cost‐benefit calculus of the Cecchini Report.     

Local institutional quality and conflict violence in Africa

All politics is local. In spite of this familiar dictum, most studies that have investigated how institutions shape the conditions for violence and peace have focused on national institutions, and neglected the local dimension. This paper investigates the effects of high-quality local political institutions on the location of violence in internal conflicts in Africa, demonstrating that the quality of local political institutions matters even when the characteristics of national institutions are accounted for. We combine georeferenced survey data from the Afrobarometer surveys with georeferenced conflict data, allowing us to study the links between institutional quality at the subnational level and the occurrence of conflict-related violence. Crucially, we find that administrative districts with high-quality local government institutions are less likely to experience violence in an internal conflict than poorly governed districts. This relationship holds when controlling for a number of relevant factors like economic development, demographics, political opinions, urbanization and country-fixed effects. We also use matching techniques to improve inference, finding rather robust indications that local institutional quality pacifies.     

Institutions in context: Reconstructing Aristotle's defence of cultural studies

Within political science, there are two alternative approaches to understanding political institutions: traditional ‘institutional studies’ and the newer ‘cultural studies’. Each approach tends to go its own way, with little debate between the two. The former explains institutions by reference to their independent behaviour which has a formative influence on political culture. The latter explains institutions by reference to their dependent behaviour which reflects the formative influence of political culture. This paper proposes a synthesis between the two approaches, offering a third alternative based on a reconstructured application of Aristotle's ‘regime analysis’, along lines experimented with by J.S. Mill. My primary aim is analytical rather that historical: to reconstruct an approach to institutional analysis which better relates institution and culture.     

Isomorphism and legitimacy in Spanish contract archaeology: the free-fall of an institutional model and the caveat of change

Societies today face multiple challenges stemming from the conflict between ‘market efficiency’ and ‘social welfare’ that are, in turn, the result of neoliberal policies affecting institutional legitimacy. Complex institutional logics associated with organisational responses are part of the early sociological debate about how organisations cope with established institutionalism in order to maintain legitimacy and survive. By employing an institutional framework and historical event sequencing approach, we aim to understand whether normative pressures can be understood to exert an influence of embeddedness and change. The paper analyses the emergence of Spanish contract archaeology after the 1990s. This new organisational pattern in the field of archaeology was a complex institutionalised process that gave rise to a new labour market. The economic crisis starting in 2008 has impacted this sector severely, to the extent that it is, at the time of writing, on the brink of extinction.     

The age of the manager is over? Shale gas fracking and the challenge to the post-political regime for English planning

Planning systems developed through the period of ‘normative’, ‘third way’ neoliberalism were critiqued as being ‘post-political’. Planning systems were developed that bypassed political conflicts through technocratic and consensus-seeking approaches following a so-called ‘end of history’ in which left/right ideological conflicts were deemed settled. Following the North Atlantic financial crisis of 2007/8 though, scholars have begun to question whether this is a suitable critique of planning, and state institutions more generally, as political and economic conditions shift. This paper examines a case of an exemplar post-political planning system: England. The paper identifies three key logics of a ‘post-political regime’ for planning: techno-managerialism, consensus and participation. Through an analysis of texts and interviews of contested planning decisions made over shale gas fracking sites, this paper shows a ‘post-political regime’ for planning facing a crisis of legitimacy as it is challenged by an anti-fracking movement and reactionary interventions from central government. The paper provides an institutional level analysis of the crisis of post-political planning, which has lost legitimacy amidst the slow collapse of normative neoliberalism.     

Capitalizing on Women's Social Capital? Women‐Targeted Microfinance in Bolivia

Both social capital and microfinance are central to mainstream development interventions, and both are predicated on the need to recognize the importance of social factors in development. Microfinance institutions mobilize social capital in the form of a group guarantee, and aim to support the development of sustainable financial institutions and income generation. Women are targeted in part because of the effectiveness of their social capital as collateral. However, although social capital is assumed to support development and income generation, the precise dynamics involved in this are rarely explored. This article examines the construction of social capital and its relationship to income generation, based on a long‐term ethnographic study of village life in rural Bolivia and the microfinance institution operating there. The author examines the complexity and gendered contradictions implied in the way that social capital is generally viewed to support economic development. It is suggested that the way microfinance institutions use social capital to support sustainable financial institutions and income generation does not always reflect the way that women's networks support access to resources and ultimately, economic development.     

Following a ‘standstill’: An ethnographic approach to financialization

This article addresses Dubai's recent financial crisis, bringing an ethnographic approach to ‘financialization’. It does so by repurposing the financial concept of ‘standstill’. Focusing on the consequences of the Dubai government's infamous ‘standstill announcement’, in late 2009, it argues that unpacking the literal and figurative registers of this concept offers insights into the political economy and lived experiences of financial crises.     

Governing Paris—Planning and Political Conflict in Île-de-France

In this paper we examine some of the major planning challenges facing the Paris region and we locate these in the context of problems of institutional coordination and cooperation. Finding the right institutions for metropolitan governance is a challenge for most of Europe's large cities. Our approach to the Paris region emphasizes the need to understand the evolution of institutions of governance and the struggles between political actors around these institutional legacies. Political competition motivates key actors in the multi-level governance of the region. We examine the struggle to develop new social housing and conflicts around transport policy in Paris. Political conflict and different perspectives on regional planning stand in the way of solutions to current problems. In the final part of the paper we discuss how potential political and institutional solutions might develop.     

Bingo or fiasco? The global financial situation is not guaranteed

The 1998 Russian debt default following the Asian financial crisis sent a signal to global capital markets that no country from now on could be seen as 'too big to fail'. The concern which followed Russia's crisis raised two questions: first, with regard to the relevance of the interest rate in the presence of highly lever-aged securities; and second, over the question of the protection of a country or institution from bankruptcy while simultaneously making sure that any rescue would not encourage either further risk-taking from investors or more badly managed policies from emerging market economies. Moreover, the moral hazard question, coupled with the sheer size of private capital flows, led international institutions to consider involving the private sector in solving financial crises. This article describes why a situation has now been reached where no future guarantee can be given to countries or financial institutions, implicitly or explicitly, that their debts will be bailed out.     

Local Financial Institutions and Income Inequality: Evidence from Brazil's Credit Cooperative Movement

Local financial institutions can play a crucial role in reducing income inequalities at the within-country level by promoting inclusive economic growth and development across time and space. This is against a backdrop of increasing financial and economic fragility, to which emerging economies have also been exposed over more recent decades and years. This article adds emerging economy evidence from Brazil to an empirical literature on the income inequality implications of cooperative financial institutions. Panel-data estimations for 2004‒19 reveal that Brazilian credit cooperatives have gone beyond commercial banks in supporting communities that have traditionally been underserved financially. Additionally, the article provides new evidence and insights on credit cooperatives’ resilience in the context of a relatively recent but severe economic crisis in Brazil. The results indicate that credit cooperatives have helped fill gaps in finance and economic opportunity that tend to arise in an emerging economy setting. Furthermore, the contribution of credit cooperatives in filling these gaps is found to be more significant at lower levels of development. These findings add theoretical and, importantly, empirical support to the relationship channel of financial inclusion, which is in line with the optimistic perspective in this debate.     

Identity and social solidarity: an ignored connection. A historical perspective on the state of Europe and its nations

The article comments on the ongoing de‐Europeanisation and re‐nationalisation of Europe from a historical perspective. The article argues that the building of national community from the 1870s onwards focused on the problem of social integration where the development of emotional feelings of belonging and solidarity was linked to the building of institutions for social politics in mutually reinforcing dynamics. The social question emerged in the wake of the spread of industrial capitalism. Its role is underexplored in the study of the building of national and European communities. The social question draws attention to the institutional capacity of nation states rather than nations based on emotions. Nationalism did not only mean the building of friend‐ enemy distinctions through ethnicity but also national socialism as a conservative reform strategy against class struggle socialism. This contention between two approaches to the problem of social integration moulded together national communities through emotions and institutions without deploying the concept of identity. The article outlines this development, culminating in the (West) European welfare states as nation– states in the strong sense of the merger of these two terms, and how it came to an end in the 1970s when a reverse development began towards social disintegration at the end accompanied by accelerating nationalism and xenophobia. The identity concept was mobilised in 1973 as a tool in the European integration project to compensate for the erosion of social institutions by means of emotions. It was taken over and politicised from having been a technical term in mathematics and psychoanalysis. The politicisation of the identity concept was an indication of a deep identity crisis in Europe and its nations. The identity therapy failed, and the identity crisis remains, accompanied by an ever louder nationalistic and xenophobic vocabulary. Emotions replace institutions. The methodological focus of the article is on the semantics around key concepts such as social politics, solidarity and identity in their historical context as forward‐looking and action‐oriented concepts in the construction of community. This approach with a focus on past futures is an alternative to the application of the retrospective analytical concepts of ethnic and civic nationalism outlining present pasts.     

On the frontlines of the law: Legal advocacy and political protest by lawyers in contested Kashmir (Respond to this article at http://www.therai.org.uk/at/debate)

This article analyzes the role of Kashmiri lawyers working in a context of conflict, militarization and political resistance in Kashmir Valley, India. It finds that the Kashmir Bar Association, operating under conditions of state control that are maintained and legitimized through the law, constitutes an authoritative normative community and powerful institutional actor, working within the parameters of the Indian legal system while simultaneously supporting and maintaining solidarity with the movement for self‐determination, and contesting the legitimacy of Indian state rule. The association's decidedly moral vision of the law offers an alternative form of legal imagination that draws on transnational normative frameworks and practices to challenge the legal provisions and legal failures that function to legitimize human‐rights violations taking place under conditions of militarization. As we show in this article, the recent crisis period in Kashmir has posed challenges to KBA lawyers, as they negotiate and assess their relationship to the state, their place in the struggle for self‐determination, and the promise and potency of law as a strategy for social change.     

Examining the Potential of Indigenous Institutions for Development: A Perspective from Borana,Ethiopia

This article examines an institutional approach to development in which indigenous institutions are viewed as a resource for achieving development. It concentrates on indigenous natural resource management (NRM) institutions which have been seen by some development agencies to be a means to address the needs of people and the environment in a way that is also participatory. Using material from Borana, Ethiopia, the article describes the indigenous NRM institutions and examines the outcome of one attempt to work with them. In the process, it shows that partnerships between development agencies and indigenous NRM institutions are often fragile, and tend to dissolve when they fail to meet the preconceptions of the developers. Through an examination of this approach to development, the article also examines the usefulness of recent broad approaches to institutions.