Governance Flashcards
(22 cards)
What are institutions according to Douglass North (1990)?
Institutions are human-created structures that evolve over time. They consist of rules, enforcement mechanisms, and norms that guide repeated human interactions.
What is the difference between formal and informal institutions?
Formal institutions include fixed rules like laws, regulations, and contracts. Informal institutions include customs, values, cultural norms, and informal networks.
How do institutions differ from organizations?
Institutions are the rules of the game, while organizations are the players that act within those rules.
How do GPN studies and institutionalists differ in their understanding of institutions?
GPN studies see institutions as actors (e.g. state agencies) facilitating strategic coupling. Institutionalists view them as frameworks shaping how economic agents operate.
According to Rodriguez-Pose (2013), what is the role of institutions in regional development?
Institutions are more important than traditional factors like geography or trade in determining regional income and growth.
What economic theories previously overlooked the role of institutions?
Neoclassical growth theory and endogenous growth theory focused more on physical capital, innovation (Romer), and education (Lucas).
How do institutions affect economic performance?
They shape transaction and transformation costs, influencing overall production and exchange costs.
What institutional reforms did the French introduce during the French Revolution?
Abolition of feudal privileges, guilds, and the introduction of equality before the law through the “code civil.”
What did Acemoglu et al. (2011) find about the Rhineland?
Post-French reforms, Rhineland industrialized faster due to a more open environment for new business and competition.
What does the “bicycle metaphor” by Rodriguez-Pose suggest?
Development requires alignment of both formal and informal institutions, like two wheels of a bicycle.
What issue is illustrated by the horticulture example in Namibia?
A disconnect between institutional intentions and development outcomes due to communal land rights and political contestation.
What is value chain governance?
It refers to who sets the rules, who participates, and the outcomes for regions and people within a value chain.
What are Gereffi’s five types of private governance coordination?
Market, Modular, Relational, Captive, and Hierarchical.
Market – Simple transactions with low costs of switching between suppliers; price governs the relationship.
Modular – Suppliers make products to a customer’s specifications using generic technology; high codifiability, low complexity.
Relational – Close interactions and trust-based relationships due to complex, tacit knowledge and mutual dependence.
Captive – Small suppliers are dependent on large buyers and face high switching costs; power is asymmetrically held by the buyer.
Hierarchical – Vertical integration within a firm; everything is controlled through managerial oversight.
What distinguishes private, public, and social governance?
Private: firm-driven (e.g. inter-firm relations); Public: state-driven (e.g. regulation, procurement); Social: civil society-driven (e.g. unions, protests)
What are Special Economic Zones (SEZs)?
Designated areas with regulatory advantages and infrastructure to attract investment and boost exports and employment.
What are benefits and risks of SEZs?
Benefits: FDI, jobs, public-private partnerships. Risks: Low spillovers, dependency, weak local linkages, “white elephants.”
What is import-substitution industrialization (ISI)?
A policy to replace imports with domestic production, often requiring protective tariffs and state participation.
How does the “Made in Rwanda” initiative reflect industrial policy?
It promotes local manufacturing through protectionism and government support to reduce import dependency.
Why does Apple capture a large share of iPod value despite manufacturing being done in China?
Because the majority of value lies in design, software, and branding, which are controlled by Apple in the U.S.
What governance model does Apple use according to Akino et al. (2021)?
Captive governance, where suppliers are tightly controlled, and Apple holds institutional power through standard-setting.
What is the political implication of the institutional perspective?
Institutions are vital for successful regional development, but there is no one-size-fits-all—context and local adaptation are crucial.
How does governance relate to power in value chains?
Governance determines inclusion, value capture, and participation, shaping the power dynamics within global production networks.
