The Politics of Institutional Learning and Creation: Bank Crises and Supervision in East Central Europe

This article examines the political conditions shaping the creation of new institutional capabilities. It analyzes bank sector reforms in the 1990s in three leading postcommunist democracies – Hungary, Poland, and the Czech Republic. It shows how different political approaches to economic transformation can facilitate or hinder the ability of relevant public and private actors to experiment and learn their new roles. With its emphasis on insulating power and rapidly implementing self-enforcing economic incentives, the “depoliticization” approach creates few changes in bank behavior and, indeed impedes investment in new capabilities at the bank and supervisory levels. The “deliberative restructuring” approach fostered innovative, costeffective monitoring structures for recapitalization, a strong supervisory system, and a stable, expanding banking sector.http://deepblue.lib.umich.edu/bitstream/2027.42/40112/3/wp726.pd

The Politics of Institutional Learning and Creation: Bank Crises and Supervision in East Central Europe

This article examines the political conditions shaping the creation of new institutional capabilities. It analyzes bank sector reforms in the 1990s in three leading postcommunist democracies – Hungary, Poland, and the Czech Republic. It shows how different political approaches to economic transformation can facilitate or hinder the ability of relevant public and private actors to experiment and learn their new roles. With its emphasis on insulating power and rapidly implementing self-enforcing economic incentives, the “depoliticization” approach creates few changes in bank behavior and, indeed impedes investment in new capabilities at the bank and supervisory levels. The “deliberative restructuring” approach fostered innovative, costeffective monitoring structures for recapitalization, a strong supervisory system, and a stable, expanding banking sector.Institutional change, transition economies, bank crises, bank supervision, learn

Network Restructuring and Firm Creation in East-Central Europe: A Public-Private Venture

The transformation of East-Central Europe deepens the debate about firm creation in a unique way: how do approaches to institutional creation impact the creation of firms? This paper theoretically and empirically explores this question by offering an alternative, embedded politics approach to explain the sharp contrasts in policy and SME manufacturing growth in the Czech Republic (CR) and Poland. Whereas Polish policies of gradual privatization and state intervention into restructuring led to significant growth in new firms, Czech policies of rapid, mass privatization produced stagnation. I argue that institutional experiments based on public actors becoming financial partners and conflict mediators enhance the ability of network actors to learn and monitor one another, and thus experiment with new forms of organization. Poland facilitated such institutional experiments not only in the ways it approached the creation of market institutions, but also in the ways it decentralized power and resources to local and regional political actors. The study utilizes data on manufacturing networks, privatization, bankruptcy, and regional government reforms collected over the past six years.http://deepblue.lib.umich.edu/bitstream/2027.42/39745/3/wp361.pd

Institutional Change and Firm Creation in East-Central Europe: An Embedded Politics Approach

A central debate about the transformation of post-communists countries is how the process of institution building impacts firm restructuring and creation. This debate has largely been dominated by approaches that emphasize either the depoliticization of institutional designs or the determining impact of pre-existing social structures. These views, however, have serious problems explaining one of the key comparative developments in East-Central Europe – the strong economic growth in Poland and the demise of the Czech Republic in the 1990s. This paper explains these differences by offering an alternative, embedded politics approach that views firm and institutional creation as intertwined experiments. Czech attempts to implant a depoliticized model of reform impeded the necessary reorganization of socio-political networks, in which firms are embedded. Poland facilitated institutional experiments not only in the ways it promoted negotiated solutions to restructuring, but also in the ways it empowered sub-national governments. The study utilizes data on manufacturing networks, privatization, bankruptcy, and regional government reforms collected over the past six years.http://deepblue.lib.umich.edu/bitstream/2027.42/39976/3/wp590.pd

Clusters and Upgrading: a Purposeful Approach

We develop a theoretical model to investigate how backward societies can improve their upgrading capabilities by transforming existing industrial agglomerations into dynamic clusters. Our main assumptions are two: first, emerging market economies are not uniform but characterized by variety of subnational regional and sectoral organizational and institutional configurations; second, the basic building block and unit of explanation in social sciences is personal action guided by some intention, which is heterogeneous across different actors. Based on these assumptions and the literature on human motives and social networks, we develop a purposeful approach to clusters and upgrading. We argue that governments can develop institutions with private actors that facilitate new types of relationships and improve the access local firms have to a variety of knowledge resources, a key ingre­dient to upgrading. We illustrate this argument revisiting the literature on clusters and upgrading in Latin America and using two case studies in Argentina, a country better known for its volatility and lack of optimal social capital and institutions. We conclude with avenues for further research

Transnational Integration Regimes as Development Programs

In drawing on recent advances in international and comparative political economy, this paper argues that diverging paths of institutional development among emerging market democracies are driven by the Transnational Integration Regimes (TIRs), in which a country is embedded. As development programs, TIRs differ in their effectiveness not simply in terms of their incentives and largess and more in terms of their emphasis on building institutional capacities, empowering a variety of domestic state and non-state actors via multiplex methods of assistance and monitoring, and their ability to merge monitoring and learning at both the national and supra-national levels. We develop a comparative framework to show these systematic differences through an analysis of the impact of the EU Accession Process on post-communist countries and NAFTA on Mexico, with special attention to the development of food safety regulatory institutions

Network composition, collaborative ties, and upgrading in emergingmarket firms: Lessons from the Argentine autoparts sector.

Abstract What types of relational and institutional mechanisms shape knowledge flows and the upgrading capabilities of emerging-market firms in the face of economic liberalization? We analyze the Argentine autoparts sector to distinguish the relative impact of different types of network relationships on a firm's process and product upgrading. A few social ties to international assemblers appear to be most beneficial for local suppliers, although they may be insufficient to compensate fully for the negative effect of being located in a lower tier. Supplier-customer relationships that are part of regular, disciplined discussions for product and process improvements appear to be especially beneficial for upgrading

Clusters and Upgrading: A Purposeful Approach

We develop a theoretical model to investigate how backward societies can improve their upgrading capabilities by transforming existing industrial agglomerations into dynamic clusters. Our main assumptions are two: first, emerging market economies are not uniform but characterized by variety of subnational regional and sectoral organizational and institutional configurations; second, the basic building block and unit of explanation in social sciences is personal action guided by some intention, which is heterogeneous across different actors. Based on these assumptions and the literature on human motives and social networks, we develop a purposeful approach to clusters and upgrading. We argue that governments can develop institutions with private actors that facilitate new types of relationships and improve the access local firms have to a variety of knowledge resources, a key ingredient to upgrading. We illustrate this argument revisiting the literature on clusters and upgrading in Latin America and using two case studies in Argentina, a country better known for its volatility and lack of optimal social capital and institutions. We conclude with avenues for further research