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Ratio Working Paper No. 200. Economic Freedom and Institutional Convergence

PublicationWorking paper
Daniel Halvarsson, Ekonomisk frihet, Företagandets villkor, Institutionell ekonomi, Niklas Elert
Ratio Working Paper No. 200
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Abstract

Francis Fukuyama argues that liberal democracy is the final form of human government and will become more and more prevalent in the long term. If this prediction is true, countries should converge in their political and economic systems toward liberal democracy, a form of institutional convergence. In this paper, we examine whether there is convergence in economic institutions, drawing on the literatures of economic convergence and of industrial organization. We use the Economic Freedom of the World-index over the period 1970-2009 to proxy for economic institutions. Our results indicate that countries with lower institutional quality experience faster institutional change than countries with higher quality, i.e., we observe institutional convergence. But countries with lower institutional quality have higher variability of institutional change. Using distributional analysis, we examine institutional transition probabilities, and find that the probability of a country ending up with high-quality institutions is high in the long-run. These findings support Fukuyama’s prediction.

Elert, N. & Halvarsson, D. (2012). Economic Freedom and Institutional Convergence. Ratio Working Paper No. 200.

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Ratio Working Paper No. 200. Economic Freedom and Institutional Convergence
Working paperPublication
Elert, N. & Halvarsson, D.
Publication year

2012

Published in

Ratio Working Paper

Abstract

Francis Fukuyama argues that liberal democracy is the final form of human government and will become more and more prevalent in the long term. If this prediction is true, countries should converge in their political and economic systems toward liberal democracy, a form of institutional convergence. In this paper, we examine whether there is convergence in economic institutions, drawing on the literatures of economic convergence and of industrial organization. We use the Economic Freedom of the World-index over the period 1970-2009 to proxy for economic institutions. Our results indicate that countries with lower institutional quality experience faster institutional change than countries with higher quality, i.e., we observe institutional convergence. But countries with lower institutional quality have higher variability of institutional change. Using distributional analysis, we examine institutional transition probabilities, and find that the probability of a country ending up with high-quality institutions is high in the long-run. These findings support Fukuyama’s prediction.

Ratio Working Paper No. 200. Economic Freedom and Institutional Convergence
Working paperPublication
Elert, N. & Halvarsson, D.
Publication year

2012

Published in

Ratio Working Paper

Abstract

Francis Fukuyama argues that liberal democracy is the final form of human government and will become more and more prevalent in the long term. If this prediction is true, countries should converge in their political and economic systems toward liberal democracy, a form of institutional convergence. In this paper, we examine whether there is convergence in economic institutions, drawing on the literatures of economic convergence and of industrial organization. We use the Economic Freedom of the World-index over the period 1970-2009 to proxy for economic institutions. Our results indicate that countries with lower institutional quality experience faster institutional change than countries with higher quality, i.e., we observe institutional convergence. But countries with lower institutional quality have higher variability of institutional change. Using distributional analysis, we examine institutional transition probabilities, and find that the probability of a country ending up with high-quality institutions is high in the long-run. These findings support Fukuyama’s prediction.

Ratio Working Paper No. 349: Industrial conflict in essential services in a new era – Swedish rules in a comparative perspective
Working paperPublication
Karlson, N.
Publication year

2021

Published in

Ratio Working Paper

Abstract

This paper examines whether the Swedish regulatory system of dealing with industrial conflicts that affect essential services need an update or reform. Are the existing rules effective in a world where many essential services are upheld by many interdependent agents in complex systems where every single node becomes critical for the functioning of the system, and where the essential service activities could be either private or public? A comparative study is conducted with the corresponding regulatory systems of the United Kingdom, Germany, and Denmark.
The conclusion is that Sweden is a special case. The Swedish protection against and readiness in dealing with societally harmful industrial conflicts in essential services is weaker than in the countries of comparison. Just as in relation to other threats to essential services, it is not sustainable to claim that just because such a threat is not currently present, there would be no need for preparedness.
There are many alternative ways to handle this. Desirable methods should both prevent harmful conflicts from erupting and end conflicts that have grown harmful to society at a later stage. The labour market organisations should have a mutual interest in reforming the rules.

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