This document discusses how underground economic activity impacts institutional change and economic performance in transition economies. It argues that when formal institutions conflict with informal norms, noncompliance with formal rules becomes widespread. This leads to protective and predatory underground economic activities that absorb resources instead of productive uses. Successful transitions redirect resources from protective and predatory behaviors toward production. Institutions affect economic outcomes by how they structure incentives for productive, protective and predatory behaviors.
This document summarizes research on the effect of government funding on nonprofit administrative efficiency. Some research finds that government funding can increase nonprofit administrative costs through increased bureaucracy, professionalization, and compliance requirements. However, other research finds government funding can also improve efficiency by allowing nonprofits to achieve scale. This paper aims to empirically test the relationship between public funding and nonprofit efficiency using a longitudinal dataset of nonprofit organizations.
1) The document discusses different types of institutional systems and how they influence economic policies and transitions. It contrasts highly centralized vs decentralized systems.
2) Centralized systems persist even with poor economic outcomes due to concentration of political power, while decentralized systems see more bottom-up innovation but can be vulnerable to statist attacks.
3) Economic transitions under democracy are influenced by the relative strength of liberal vs anti-liberal forces, which are affected by factors like economic conditions, interest groups, ideological influences, and how reforms are linked to other values in society. Both crises and economic improvements can potentially strengthen either side.
HLEG thematic workshop on measuring economic, social and environmental resili...StatsCommunications
HLEG thematic workshop on Measuring economic, social and environmental resilience, 25-26 November 2015, Rome, Italy, More information at: http://oe.cd/StrategicForum2015
Political economy embraces the complex political nature of decision making to investigate how power and authority affect economic choices in a society. Political economy analysis offers no quick fixes but leads to smarter engagement.
Policy support for harnessing informal sector entrepreneurs Dr Lendy Spires
This document analyzes policy support and regulatory interventions for informal sector entrepreneurs across different country contexts through a comparative analysis. It discusses two main approaches to understanding informal sector entrepreneurship: the institutionalist perspective that focuses on regulations and structures, and the opportunity-driven perspective that examines individual entrepreneurs and opportunities. The document then examines specific country examples, categorizing national perspectives as either supportive or focused on control. It analyzes regulatory changes made by transition economies like Czech Republic, Poland, and Hungary, as well as developing economies like India, Kenya, and Ethiopia. The approaches taken by different countries range from facilitation and recognition of the informal sector to strict regulatory control.
The US employment system is influenced by factors such as geopolitics, corporate governance, labor laws, and industrial relations. It utilizes approaches including institutional theory and focuses on trends like decentralization and job growth. HR practices are shaped by cultural, socio-political, economic, and management contexts. Flexibility has increased as union density has decreased in the manufacturing sector. The system aims to increase competitiveness while ensuring management objectives and worker protections are balanced.
Advanced EC seminar on decentralisation and local governance
European Commission EuropeAid
2-5 July 2012, Brussels
The seminar reviewed the country context and the evolving international development framework and considered how to manage the political dimensions of decentralisation. It also looked at using decentralisation as a trigger to foster better development outcomes and governance and what all this means for future EU engagement in decentralisation and local governance. Jean Bossuyt, ECDPM, was the lead facilitator of this meeting. Alisa Herrero, ECDPM, was also one of the experts facilitating this seminar.
Corporate Governance: Global Issues for the Futurekakabadse
The presentation 'Corporate Governance: Global Issues for the Future' that Nada K. Kakabadse, Professor in Management and Business Research at Northampton Business School, gave at the EABIS Colloquium, 19-21 September 2009 in Barcelona.
This document summarizes research on the effect of government funding on nonprofit administrative efficiency. Some research finds that government funding can increase nonprofit administrative costs through increased bureaucracy, professionalization, and compliance requirements. However, other research finds government funding can also improve efficiency by allowing nonprofits to achieve scale. This paper aims to empirically test the relationship between public funding and nonprofit efficiency using a longitudinal dataset of nonprofit organizations.
1) The document discusses different types of institutional systems and how they influence economic policies and transitions. It contrasts highly centralized vs decentralized systems.
2) Centralized systems persist even with poor economic outcomes due to concentration of political power, while decentralized systems see more bottom-up innovation but can be vulnerable to statist attacks.
3) Economic transitions under democracy are influenced by the relative strength of liberal vs anti-liberal forces, which are affected by factors like economic conditions, interest groups, ideological influences, and how reforms are linked to other values in society. Both crises and economic improvements can potentially strengthen either side.
HLEG thematic workshop on measuring economic, social and environmental resili...StatsCommunications
HLEG thematic workshop on Measuring economic, social and environmental resilience, 25-26 November 2015, Rome, Italy, More information at: http://oe.cd/StrategicForum2015
Political economy embraces the complex political nature of decision making to investigate how power and authority affect economic choices in a society. Political economy analysis offers no quick fixes but leads to smarter engagement.
Policy support for harnessing informal sector entrepreneurs Dr Lendy Spires
This document analyzes policy support and regulatory interventions for informal sector entrepreneurs across different country contexts through a comparative analysis. It discusses two main approaches to understanding informal sector entrepreneurship: the institutionalist perspective that focuses on regulations and structures, and the opportunity-driven perspective that examines individual entrepreneurs and opportunities. The document then examines specific country examples, categorizing national perspectives as either supportive or focused on control. It analyzes regulatory changes made by transition economies like Czech Republic, Poland, and Hungary, as well as developing economies like India, Kenya, and Ethiopia. The approaches taken by different countries range from facilitation and recognition of the informal sector to strict regulatory control.
The US employment system is influenced by factors such as geopolitics, corporate governance, labor laws, and industrial relations. It utilizes approaches including institutional theory and focuses on trends like decentralization and job growth. HR practices are shaped by cultural, socio-political, economic, and management contexts. Flexibility has increased as union density has decreased in the manufacturing sector. The system aims to increase competitiveness while ensuring management objectives and worker protections are balanced.
Advanced EC seminar on decentralisation and local governance
European Commission EuropeAid
2-5 July 2012, Brussels
The seminar reviewed the country context and the evolving international development framework and considered how to manage the political dimensions of decentralisation. It also looked at using decentralisation as a trigger to foster better development outcomes and governance and what all this means for future EU engagement in decentralisation and local governance. Jean Bossuyt, ECDPM, was the lead facilitator of this meeting. Alisa Herrero, ECDPM, was also one of the experts facilitating this seminar.
Corporate Governance: Global Issues for the Futurekakabadse
The presentation 'Corporate Governance: Global Issues for the Future' that Nada K. Kakabadse, Professor in Management and Business Research at Northampton Business School, gave at the EABIS Colloquium, 19-21 September 2009 in Barcelona.
This document discusses Russian-speaking organized crime groups in the European Union. It begins by noting the growth of transnational criminal organizations since the fall of the Soviet Union. These groups have expanded their activities and influence throughout Europe, dominating criminal worlds in many countries. The document then provides definitions of key terms from international agreements, describing organized criminal groups as structured associations of three or more people working together over time to commit serious crimes. It examines the development and characteristics of Russian-speaking organized crime in Europe, their illegal activities in various EU countries, and the impacts of these transnational criminal groups.
Systematic Change in a Global Perspective.pptxRachelSollano2
The document discusses economic transition from command to market systems. It defines transition as the process of systemic change from one economic system to another. Some key points made include:
- Transition involves establishing market arrangements like private property and prices set by supply and demand instead of central planning.
- The transition process has been lengthy and complex, with varied outcomes across countries depending on initial conditions, policies enacted, and environmental factors.
- Privatization of state-owned enterprises is a major part of transition and involves changing the role of the state in the economy from producer to regulator. Stages of privatization include developing legal frameworks and selling state assets.
This document discusses and defines the concept of corporate governance. It provides definitions from various sources and discusses the importance and significance of corporate governance. Some key points:
1. Corporate governance involves balancing the interests of a company's many stakeholders through systems of rules, practices and processes.
2. It became a pressing issue following accounting scandals to restore confidence in markets.
3. Good corporate governance practices include discipline, transparency, accountability, responsibility and fairness.
The document discusses the emergence of market governance in the absence of formal regulation in the US financial system. It notes that since the 1980s, a parallel market-based system has developed alongside the traditional bank-based system, and now dominates credit and liquidity in the US economy. However, this new system has not been accompanied by expanded laws and oversight. The article examines governance mechanisms that have emerged in the largely unregulated US hedge fund market, based on interviews and data analysis. It finds that (1) governance structures result from interactions between formal bank regulation and informal norms of parallel financial organizations, and (2) governance failures occur where formal and informal mechanisms break down.
This document analyzes structural changes in the Brazilian industry from 1982-1997, a period of economic and institutional uncertainty. It explores how macroeconomic changes interacted with firm behaviors and industrial structure at the micro level. The analysis focuses on how firms adapted strategies in areas like sales, finance, production and investment to develop flexibility in responding to uncertainty. While uncertainties decreased after 1994, the analysis suggests firms developed in different ways and uncertainty still influences industry composition.
This paper analyzes how the value of political capital varies across different institutional domains in China's transitioning market economy. The researchers conducted a transaction-focused analysis to compare advantages from political connections. Their results show political capital is most valuable in domains where the government restricts economic activity. This suggests China may have experienced a transition tipping point around 2000, as the value of political connections there does not differ fundamentally from patterns in established market economies. The paper aims to provide a nuanced view of political capital's fungibility across different transaction types and institutional settings.
1. The document discusses the role that institutions play in the process of economic development. It argues that institutions, both formal and informal, shape the incentives and behaviors of individuals in ways that can either promote or hinder economic growth.
2. Effective institutions that protect property rights, enforce contracts, and reduce uncertainty are necessary for sustainable economic development. However, institutions must also arise endogenously based on local knowledge and context in order to be sustainable.
3. The example of Botswana is discussed as a case where institutions developed in a way that was compatible with local culture and traditions, leading to endogenous economic success.
This document provides an analysis of governance indicators. It begins with an abstract that discusses the increased interest in countries' governance from investors, aid donors, and researchers. Section 1 introduces the topic and explains that the paper will review commonly used governance indicators and discuss their use and usefulness. Section 2 discusses the need for governance indicators and defines governance. It argues that governance is important for economic performance and policy effectiveness. The document concludes that while governance indicators are a useful tool, they should be supplemented with other information sources.
The document discusses the need for independent audits of internal responsibility systems for occupational health and safety. It analyzes orders issued by Ontario's Ministry of Labour in the mining sector over 10 years and finds that even sophisticated industries in developed countries need third party audits with sanction powers. Non-compliance shown by orders provides a leading indicator that can complement other techniques for gauging the strength of internal responsibility systems based on workplace questionnaires. The analysis shows third party audits are needed as checks on internal responsibility systems.
The document discusses New Institutional Economics (NIE) and its relevance for the International Food Policy Research Institute (IFPRI). NIE examines how institutions, both formal and informal, shape economic performance and outcomes. It analyzes how transaction costs influence organizational forms and contracts between parties. NIE is useful for IFPRI's work in developing countries, where market failures and imperfect institutions are common. The document provides examples of how NIE insights could further IFPRI's research on issues like contract farming and international food standards.
Corporate Governance - A Broader Perspectiveiosrjce
In this paper it is argued that the notion of market-based corporate governance approach should be
broadened to include the problem of owner-controlled firms and large block-holders and should be generalized
to a model of multilateral negotiations and influence-seeking among a number of different stakeholders. In
practice such a model should incorporate checks and balances between various stakeholders and outside
constraints and must take into account how the political and legal system of a country affects this balance. In
fact, even if there is theoretical reason to believe that ownership with its incumbent benefits and costs belongs
to equity, this view is not dominant in most economies outside United Kingdom and United States of America.
The broader notion of corporate governance offers hope for understanding better the developing economies in
particular - and other economies in general - where anonymous stock markets are not likely to promote the
necessary entrepreneurial activity and corporate restructuring. It suggests that other mechanisms, such as
product market competition, peer pressure, or labor market activity, may compensate for this weakness, or more
realistically, may be more promising targets for legal or political reform than the stock market.
This document summarizes the arguments made in an article about market-based regulation versus government regulation. It discusses how markets evolve their own regulatory systems through institutions, rules, standards, and reputation that constrain opportunistic behavior without government intervention. While government regulation aims to correct market failures, it can undermine the complex self-regulatory mechanisms developed by markets. The document examines case studies and arguments for how regulation naturally arises from market forces rather than requiring an external regulator.
Fundamental of Public Administration PPA 101NANCY GENOVADustiBuckner14
Fundamental of Public Administration PPA 101
NANCY GENOVA, MPA
INSTRUCTOR/ CHAPTER 2 (P.35-75)
Learning Objectives Chapter 2Understanding the organization and function of the branches of the federal governmentUnderstanding the organization and function of the other levels of governmentUnderstanding the policy processExploring the controls exerted by the legislative branch on administratorsExploring the controls exerted by the judicial branch on administrators
Administrative Organizations
The Executive Office of the PresidentCabinet-Level Executive DepartmentsIndependent Agencies, Regulatory Commissions, and Public CorporationsAgencies Supporting the Legislature and the Judiciary
The State Level
Its own constitutionIts own asssetsNumerous departments and commissions
The Local Level
CitiesCountiesNative American TribesSpecial Purpose GovernmentsNonprofit Organizations and Associations
RELATIONSHIPS WITH THE LEGISLATIVE BODY
The Policy Process
Exploring Concepts: STAGES IN THE POLICY PROCESS
Agenda SettingPolicy FormulationPolicy LegitimationPolicy ImplementationPolicy Evaluation and Change
Political Context of PA Public administrators need awareness of how all the government systems work in an effort to become more effective in regards to what they doAttention to how leadership works in our political settings is essential to understanding how to get things done as a public administrator
Public AdministratorsPublic administrators are responsible for implementing public policyProposals are written and submitted the process includes….Organizations develop policies to guide their activitiesPublic agencies work together with executive, the legislature and the judiciary to seek important policy goals
Federal Government 3 BranchesExecutiveLegislatureJudiciary‘Founding Father’s’ had fears of concentrated power that’s why they divided the power
Administrative Organizations & Executive Leadership
Executive Office of the President- Office of Management & Budget, National Security Council, Council of Economic Advisers
Cabinet level executive departments- Department of Defense, Health & Human Services, Treasury, Agriculture, Housing & Urban Development, Education, Veterans Affairs, Homeland Security (2002,) Ambassador to United Nations
Independent Agencies, Regulatory Commissions, and Public Corporations
Jurisdiction & Federalism
Jurisdiction- territorial range of government authority is sometimes used as a synonym for city or townFederalism- a system of government in which powers are divided between a central (national) government and regional (state) goverments.
Relationship Among 3 Levels of the GovernmentFederalStateLocalCooperation vs. conflictWho has policy making authority?
The Capacity of States & LocalitiesIn the 1950’s & 60’s policy reflected the interest of the elite1980’s state government transformed from weak links to progressive political units1990’s brought about local governments being ‘proact ...
This document discusses Russian-speaking organized crime groups in the European Union. It begins by noting the growth of transnational criminal organizations since the fall of the Soviet Union. These groups have expanded their activities and influence throughout Europe, dominating criminal worlds in many countries. The document then provides definitions of key terms from international agreements, describing organized criminal groups as structured associations of three or more people working together over time to commit serious crimes. It examines the development and characteristics of Russian-speaking organized crime in Europe, their illegal activities in various EU countries, and the impacts of these transnational criminal groups.
Systematic Change in a Global Perspective.pptxRachelSollano2
The document discusses economic transition from command to market systems. It defines transition as the process of systemic change from one economic system to another. Some key points made include:
- Transition involves establishing market arrangements like private property and prices set by supply and demand instead of central planning.
- The transition process has been lengthy and complex, with varied outcomes across countries depending on initial conditions, policies enacted, and environmental factors.
- Privatization of state-owned enterprises is a major part of transition and involves changing the role of the state in the economy from producer to regulator. Stages of privatization include developing legal frameworks and selling state assets.
This document discusses and defines the concept of corporate governance. It provides definitions from various sources and discusses the importance and significance of corporate governance. Some key points:
1. Corporate governance involves balancing the interests of a company's many stakeholders through systems of rules, practices and processes.
2. It became a pressing issue following accounting scandals to restore confidence in markets.
3. Good corporate governance practices include discipline, transparency, accountability, responsibility and fairness.
The document discusses the emergence of market governance in the absence of formal regulation in the US financial system. It notes that since the 1980s, a parallel market-based system has developed alongside the traditional bank-based system, and now dominates credit and liquidity in the US economy. However, this new system has not been accompanied by expanded laws and oversight. The article examines governance mechanisms that have emerged in the largely unregulated US hedge fund market, based on interviews and data analysis. It finds that (1) governance structures result from interactions between formal bank regulation and informal norms of parallel financial organizations, and (2) governance failures occur where formal and informal mechanisms break down.
This document analyzes structural changes in the Brazilian industry from 1982-1997, a period of economic and institutional uncertainty. It explores how macroeconomic changes interacted with firm behaviors and industrial structure at the micro level. The analysis focuses on how firms adapted strategies in areas like sales, finance, production and investment to develop flexibility in responding to uncertainty. While uncertainties decreased after 1994, the analysis suggests firms developed in different ways and uncertainty still influences industry composition.
This paper analyzes how the value of political capital varies across different institutional domains in China's transitioning market economy. The researchers conducted a transaction-focused analysis to compare advantages from political connections. Their results show political capital is most valuable in domains where the government restricts economic activity. This suggests China may have experienced a transition tipping point around 2000, as the value of political connections there does not differ fundamentally from patterns in established market economies. The paper aims to provide a nuanced view of political capital's fungibility across different transaction types and institutional settings.
1. The document discusses the role that institutions play in the process of economic development. It argues that institutions, both formal and informal, shape the incentives and behaviors of individuals in ways that can either promote or hinder economic growth.
2. Effective institutions that protect property rights, enforce contracts, and reduce uncertainty are necessary for sustainable economic development. However, institutions must also arise endogenously based on local knowledge and context in order to be sustainable.
3. The example of Botswana is discussed as a case where institutions developed in a way that was compatible with local culture and traditions, leading to endogenous economic success.
This document provides an analysis of governance indicators. It begins with an abstract that discusses the increased interest in countries' governance from investors, aid donors, and researchers. Section 1 introduces the topic and explains that the paper will review commonly used governance indicators and discuss their use and usefulness. Section 2 discusses the need for governance indicators and defines governance. It argues that governance is important for economic performance and policy effectiveness. The document concludes that while governance indicators are a useful tool, they should be supplemented with other information sources.
The document discusses the need for independent audits of internal responsibility systems for occupational health and safety. It analyzes orders issued by Ontario's Ministry of Labour in the mining sector over 10 years and finds that even sophisticated industries in developed countries need third party audits with sanction powers. Non-compliance shown by orders provides a leading indicator that can complement other techniques for gauging the strength of internal responsibility systems based on workplace questionnaires. The analysis shows third party audits are needed as checks on internal responsibility systems.
The document discusses New Institutional Economics (NIE) and its relevance for the International Food Policy Research Institute (IFPRI). NIE examines how institutions, both formal and informal, shape economic performance and outcomes. It analyzes how transaction costs influence organizational forms and contracts between parties. NIE is useful for IFPRI's work in developing countries, where market failures and imperfect institutions are common. The document provides examples of how NIE insights could further IFPRI's research on issues like contract farming and international food standards.
Corporate Governance - A Broader Perspectiveiosrjce
In this paper it is argued that the notion of market-based corporate governance approach should be
broadened to include the problem of owner-controlled firms and large block-holders and should be generalized
to a model of multilateral negotiations and influence-seeking among a number of different stakeholders. In
practice such a model should incorporate checks and balances between various stakeholders and outside
constraints and must take into account how the political and legal system of a country affects this balance. In
fact, even if there is theoretical reason to believe that ownership with its incumbent benefits and costs belongs
to equity, this view is not dominant in most economies outside United Kingdom and United States of America.
The broader notion of corporate governance offers hope for understanding better the developing economies in
particular - and other economies in general - where anonymous stock markets are not likely to promote the
necessary entrepreneurial activity and corporate restructuring. It suggests that other mechanisms, such as
product market competition, peer pressure, or labor market activity, may compensate for this weakness, or more
realistically, may be more promising targets for legal or political reform than the stock market.
This document summarizes the arguments made in an article about market-based regulation versus government regulation. It discusses how markets evolve their own regulatory systems through institutions, rules, standards, and reputation that constrain opportunistic behavior without government intervention. While government regulation aims to correct market failures, it can undermine the complex self-regulatory mechanisms developed by markets. The document examines case studies and arguments for how regulation naturally arises from market forces rather than requiring an external regulator.
Fundamental of Public Administration PPA 101NANCY GENOVADustiBuckner14
Fundamental of Public Administration PPA 101
NANCY GENOVA, MPA
INSTRUCTOR/ CHAPTER 2 (P.35-75)
Learning Objectives Chapter 2Understanding the organization and function of the branches of the federal governmentUnderstanding the organization and function of the other levels of governmentUnderstanding the policy processExploring the controls exerted by the legislative branch on administratorsExploring the controls exerted by the judicial branch on administrators
Administrative Organizations
The Executive Office of the PresidentCabinet-Level Executive DepartmentsIndependent Agencies, Regulatory Commissions, and Public CorporationsAgencies Supporting the Legislature and the Judiciary
The State Level
Its own constitutionIts own asssetsNumerous departments and commissions
The Local Level
CitiesCountiesNative American TribesSpecial Purpose GovernmentsNonprofit Organizations and Associations
RELATIONSHIPS WITH THE LEGISLATIVE BODY
The Policy Process
Exploring Concepts: STAGES IN THE POLICY PROCESS
Agenda SettingPolicy FormulationPolicy LegitimationPolicy ImplementationPolicy Evaluation and Change
Political Context of PA Public administrators need awareness of how all the government systems work in an effort to become more effective in regards to what they doAttention to how leadership works in our political settings is essential to understanding how to get things done as a public administrator
Public AdministratorsPublic administrators are responsible for implementing public policyProposals are written and submitted the process includes….Organizations develop policies to guide their activitiesPublic agencies work together with executive, the legislature and the judiciary to seek important policy goals
Federal Government 3 BranchesExecutiveLegislatureJudiciary‘Founding Father’s’ had fears of concentrated power that’s why they divided the power
Administrative Organizations & Executive Leadership
Executive Office of the President- Office of Management & Budget, National Security Council, Council of Economic Advisers
Cabinet level executive departments- Department of Defense, Health & Human Services, Treasury, Agriculture, Housing & Urban Development, Education, Veterans Affairs, Homeland Security (2002,) Ambassador to United Nations
Independent Agencies, Regulatory Commissions, and Public Corporations
Jurisdiction & Federalism
Jurisdiction- territorial range of government authority is sometimes used as a synonym for city or townFederalism- a system of government in which powers are divided between a central (national) government and regional (state) goverments.
Relationship Among 3 Levels of the GovernmentFederalStateLocalCooperation vs. conflictWho has policy making authority?
The Capacity of States & LocalitiesIn the 1950’s & 60’s policy reflected the interest of the elite1980’s state government transformed from weak links to progressive political units1990’s brought about local governments being ‘proact ...
The article discusses how good corporate governance is important for banks' financial performance and long-term sustainability. It argues that banks with strong corporate governance practices tend to have higher profitability and lower costs of capital. Ensuring proper oversight of management and clear accountability helps minimize risks and maintains stakeholder trust, benefiting the bank's financial position.
PMI Sydney Chapter Presentation 11 10 05Bryan Fenech
Presentation describing how Project Portfolio Management is a means of applying modern market and investment disciplines to the internal management and governance of large organisations.
The document contains review questions and answers about corporate governance, business ethics, risk management, and internal control. It addresses topics such as the definition of governance, the purpose and objectives of corporate governance, the roles and responsibilities of boards of directors, shareholders, and management. It also discusses principles of good governance and transparency.
The document presents a theoretical political-economic model that analyzes how corruption and foreign direct investment (FDI) interact to determine an optimal institutional policy level in a developing country. There are two types of people - honest people who work in the private sector, and dishonest people who work for the corrupt civil service. The model considers the costs to firms of paying taxes through both legal and illegal structures, and how the institutional policy level affects these costs. The optimal policy level depends on the relative efficiency of the legal versus illegal structures, as well as the degree of corruption in the political process and the size of political contributions from dishonest lobby groups.
Legal Factors affecting Business Law in KurdistanAI Publications
The main purpose of this study is to examine the relationship between legal factors and business law in Kurdistan. The Business's involvement in financing legitimate change, however still constrained, has just yielded some valuable exercises. The researcher employed quantitative technique to analyze the association between factors affecting business law in Kurdistan. For this reason, the researcher used four different legal factors such us (company law, contract law, employment law and competition law) as independent factors to measure the dependent factor which is business law. I distributed 115 questionnaires, but only 102 questionnaires. The results of multiple regression analysis, Company law, contract law, employment law, and competition law as a legal factors influence positively and significantly business law in Kurdistan.
A re balanced scorecard- a strategic approach to enhance manageriPhuong Dx
This document proposes a re-balanced scorecard framework to better evaluate managerial performance in complex environments. It views the firm as having social contracts beyond shareholders to stakeholders like employees, communities, and the environment. The conceptual framework is based on social contract theory and sees the firm as a nexus of social rather than just economic contracts. It then maps this conceptual framework to a practical re-balanced scorecard structure that can induce improved managerial behavior aligned with long-term sustainability and social contract obligations. This framework aims to better account for multidimensional factors managers face and costs of misconduct in evaluating performance.
This document provides an introduction and overview of the concept of "zero-tolerance policing". It discusses how the term is misleading as it does not actually refer to intolerance, but rather confidence in law enforcement. Zero-tolerance policing aims to curb low-level, quality-of-life offenses in order to prevent more serious crime. It emphasizes effective but restrained policing of minor infractions in order to establish security and order. The introduction examines examples of zero-tolerance policing from the past and discusses its goals of preventing disorderly behavior and petty crime from escalating. It also addresses criticisms of the approach.
GIS aids crime analysis by identifying patterns and trends, supporting intelligence-led policing strategies, and integrating diverse data sources. It enhances crime analysis by highlighting suspicious incidents, supporting cross-jurisdictional pattern analysis, and educating the public. GIS provides tools to capture crime series, forecast crime, and optimize resource allocation to reduce crime and disorder.
This document discusses how geospatial insight, or the analysis of location-based data, can be used to transform the public sector. It begins by providing background on the history of maps and geospatial data collection. Next, it outlines key drivers for increased adoption of geospatial analytics, including advances in hardware, software, data collection, and public familiarity with maps. The document then discusses how geospatial insight can be used to increase efficiency and cost savings, improve service quality and effectiveness, engage the public, and enable collaboration. Examples are provided of local governments optimizing bus routes to save money or better matching housing to residents' needs. Overall, the document argues geospatial analytics is an underutilized tool that can help public organizations
John Deighton discusses the ongoing publishing revolution and how business methods are evolving with new social and mobile platforms, while fundamental aspects of human nature remain the same. He describes how Demand Media uses algorithms to determine what content to publish based on search queries and social media discussions in order to maximize advertising revenue. While "useful" content benefits from search engine optimization, "fun" content spreads virally across social networks. Cheezburger.com crowdsources content from visitors while revenue comes from advertising. Gawker Media's audience research is driven by data from its sites and social media to determine what topics people engage with.
This document discusses the dilemma of using social media for intelligence purposes. On one hand, social media intelligence (SOCMINT) could help keep the public safe by identifying threats. However, national security also depends on public support, and social media challenges conceptions of privacy and consent. SOCMINT does not fit easily into current legal frameworks and raises issues about privacy, surveillance, and how data is accessed and used. The paper argues for establishing ethical principles and reviewing legislation to ensure any SOCMINT use is legitimate, proportional, and has public support.
The document discusses the legal and regulatory issues utilities may face when engaging in social media. It provides an overview of how utilities are currently using social media, such as for crisis communication and customer education. The article then analyzes various legal issues utilities should consider as an employer, business entity, and regulated industry when using social media. It concludes by recommending best practices for utilities to develop social media policies that reduce risks.
This study examines how emotional content and characteristics influence the virality and sharing of online content. Specifically:
1) The researchers analyzed almost 7,000 New York Times articles to see which made the "most e-mailed" list, controlling for other factors like prominence.
2) They found positive content is generally more viral than negative. However, arousal level also influences sharing - high-arousal emotions like anger or awe increase virality, while low-arousal emotions like sadness decrease it.
3) Follow-up lab experiments directly manipulated emotions to confirm arousal impacts social transmission. Content that induces more physiological activation is more likely to be shared with others.
This document discusses the opportunities and challenges of using social media for public safety purposes. It begins with an overview of how social media has evolved intelligence collection from a traditional production focus to a contemporary emphasis on collaboration and crowd-sourcing. The document then provides examples of how social media has been used for intelligence gathering during crises as well as case studies on leveraging public support. It concludes by discussing collaborative tools for information sharing and risks around security, accuracy, and analyzing high volumes of social media data.
This document discusses how organizations can leverage collective intelligence, which is defined as the aggregated knowledge, insights, and expertise of individuals both inside and outside the organization. It provides three key findings on successful collective intelligence efforts: 1) addressing sources of resistance such as operational challenges and perceived loss of control, 2) integrating collective intelligence into the work environment both technologically and culturally, and 3) acting on insights discovered and communicating value to stakeholders. The document also discusses four approaches organizations can use to apply collective intelligence: discovering new ideas, augmenting skills and distributing work, improving forecasting, and identifying new opportunities. It provides examples of how companies such as The Economist, Coach, Citi, El Paso Exploration & Production, and IBM
This document provides background information on social media and issues related to its use by law enforcement agencies. It discusses how social media can be used for investigations, community outreach, and information sharing. However, it also notes legal issues surrounding privacy and free speech that departments must consider when developing social media policies to regulate employee usage and official department use. The document aims to educate law enforcement executives on developing appropriate social media policies and guidelines.
This document provides guidance on developing a listening strategy for law enforcement agencies to monitor online conversations. It recommends setting goals for monitoring, deciding where to search like specific social media platforms or websites, and determining topics of interest to search for like the agency name. Several free online tools are described that can help with monitoring, including Google Alerts, Twitter search, and RSS feeds. The purpose of listening online is to gain situational awareness, understand community perspectives, and correct misinformation.
The International Association of Chiefs of Police and Bureau of Justice Assistance provide guidance on increasing social media presence for law enforcement agencies. They recommend having a strategy and goals before launching accounts, promoting accounts on websites and printed materials, and regularly engaging with communities by answering questions, sharing content, and asking for feedback and investigative help. Building partnerships with other organizations can also help maximize outreach. The IACP has additional resources available online or by request to help agencies enhance their social media strategies.
The document summarizes the results of a 2011 survey conducted by the IACP on law enforcement's use of social media. Over 800 law enforcement agencies from 49 states responded. Key findings include: 88% of agencies surveyed use social media, most commonly for criminal investigations; 57.9% of non-users plan to adopt it; and 48.6% have a social media policy, while 22.1% are developing one. Resource constraints were the top barrier for non-users.
This document is the table of contents for Volume 73, Number 3 of the RCMP Gazette from 2011. The cover section focuses on how social media and new technologies are changing the relationship between police and media. It includes articles on the RCMP's use of social media, how data mining online can help investigations, and how television shows influence public perceptions of police work. Other articles discuss education-based discipline for officers and using earthquake analysis principles to prevent crimes.
Discover top-tier mobile app development services, offering innovative solutions for iOS and Android. Enhance your business with custom, user-friendly mobile applications.
"Scaling RAG Applications to serve millions of users", Kevin GoedeckeFwdays
How we managed to grow and scale a RAG application from zero to thousands of users in 7 months. Lessons from technical challenges around managing high load for LLMs, RAGs and Vector databases.
High performance Serverless Java on AWS- GoTo Amsterdam 2024Vadym Kazulkin
Java is for many years one of the most popular programming languages, but it used to have hard times in the Serverless community. Java is known for its high cold start times and high memory footprint, comparing to other programming languages like Node.js and Python. In this talk I'll look at the general best practices and techniques we can use to decrease memory consumption, cold start times for Java Serverless development on AWS including GraalVM (Native Image) and AWS own offering SnapStart based on Firecracker microVM snapshot and restore and CRaC (Coordinated Restore at Checkpoint) runtime hooks. I'll also provide a lot of benchmarking on Lambda functions trying out various deployment package sizes, Lambda memory settings, Java compilation options and HTTP (a)synchronous clients and measure their impact on cold and warm start times.
"Choosing proper type of scaling", Olena SyrotaFwdays
Imagine an IoT processing system that is already quite mature and production-ready and for which client coverage is growing and scaling and performance aspects are life and death questions. The system has Redis, MongoDB, and stream processing based on ksqldb. In this talk, firstly, we will analyze scaling approaches and then select the proper ones for our system.
Conversational agents, or chatbots, are increasingly used to access all sorts of services using natural language. While open-domain chatbots - like ChatGPT - can converse on any topic, task-oriented chatbots - the focus of this paper - are designed for specific tasks, like booking a flight, obtaining customer support, or setting an appointment. Like any other software, task-oriented chatbots need to be properly tested, usually by defining and executing test scenarios (i.e., sequences of user-chatbot interactions). However, there is currently a lack of methods to quantify the completeness and strength of such test scenarios, which can lead to low-quality tests, and hence to buggy chatbots.
To fill this gap, we propose adapting mutation testing (MuT) for task-oriented chatbots. To this end, we introduce a set of mutation operators that emulate faults in chatbot designs, an architecture that enables MuT on chatbots built using heterogeneous technologies, and a practical realisation as an Eclipse plugin. Moreover, we evaluate the applicability, effectiveness and efficiency of our approach on open-source chatbots, with promising results.
Dandelion Hashtable: beyond billion requests per second on a commodity serverAntonios Katsarakis
This slide deck presents DLHT, a concurrent in-memory hashtable. Despite efforts to optimize hashtables, that go as far as sacrificing core functionality, state-of-the-art designs still incur multiple memory accesses per request and block request processing in three cases. First, most hashtables block while waiting for data to be retrieved from memory. Second, open-addressing designs, which represent the current state-of-the-art, either cannot free index slots on deletes or must block all requests to do so. Third, index resizes block every request until all objects are copied to the new index. Defying folklore wisdom, DLHT forgoes open-addressing and adopts a fully-featured and memory-aware closed-addressing design based on bounded cache-line-chaining. This design offers lock-free index operations and deletes that free slots instantly, (2) completes most requests with a single memory access, (3) utilizes software prefetching to hide memory latencies, and (4) employs a novel non-blocking and parallel resizing. In a commodity server and a memory-resident workload, DLHT surpasses 1.6B requests per second and provides 3.5x (12x) the throughput of the state-of-the-art closed-addressing (open-addressing) resizable hashtable on Gets (Deletes).
The Department of Veteran Affairs (VA) invited Taylor Paschal, Knowledge & Information Management Consultant at Enterprise Knowledge, to speak at a Knowledge Management Lunch and Learn hosted on June 12, 2024. All Office of Administration staff were invited to attend and received professional development credit for participating in the voluntary event.
The objectives of the Lunch and Learn presentation were to:
- Review what KM ‘is’ and ‘isn’t’
- Understand the value of KM and the benefits of engaging
- Define and reflect on your “what’s in it for me?”
- Share actionable ways you can participate in Knowledge - - Capture & Transfer
LF Energy Webinar: Carbon Data Specifications: Mechanisms to Improve Data Acc...DanBrown980551
This LF Energy webinar took place June 20, 2024. It featured:
-Alex Thornton, LF Energy
-Hallie Cramer, Google
-Daniel Roesler, UtilityAPI
-Henry Richardson, WattTime
In response to the urgency and scale required to effectively address climate change, open source solutions offer significant potential for driving innovation and progress. Currently, there is a growing demand for standardization and interoperability in energy data and modeling. Open source standards and specifications within the energy sector can also alleviate challenges associated with data fragmentation, transparency, and accessibility. At the same time, it is crucial to consider privacy and security concerns throughout the development of open source platforms.
This webinar will delve into the motivations behind establishing LF Energy’s Carbon Data Specification Consortium. It will provide an overview of the draft specifications and the ongoing progress made by the respective working groups.
Three primary specifications will be discussed:
-Discovery and client registration, emphasizing transparent processes and secure and private access
-Customer data, centering around customer tariffs, bills, energy usage, and full consumption disclosure
-Power systems data, focusing on grid data, inclusive of transmission and distribution networks, generation, intergrid power flows, and market settlement data
Taking AI to the Next Level in Manufacturing.pdfssuserfac0301
Read Taking AI to the Next Level in Manufacturing to gain insights on AI adoption in the manufacturing industry, such as:
1. How quickly AI is being implemented in manufacturing.
2. Which barriers stand in the way of AI adoption.
3. How data quality and governance form the backbone of AI.
4. Organizational processes and structures that may inhibit effective AI adoption.
6. Ideas and approaches to help build your organization's AI strategy.
For the full video of this presentation, please visit: https://www.edge-ai-vision.com/2024/06/temporal-event-neural-networks-a-more-efficient-alternative-to-the-transformer-a-presentation-from-brainchip/
Chris Jones, Director of Product Management at BrainChip , presents the “Temporal Event Neural Networks: A More Efficient Alternative to the Transformer” tutorial at the May 2024 Embedded Vision Summit.
The expansion of AI services necessitates enhanced computational capabilities on edge devices. Temporal Event Neural Networks (TENNs), developed by BrainChip, represent a novel and highly efficient state-space network. TENNs demonstrate exceptional proficiency in handling multi-dimensional streaming data, facilitating advancements in object detection, action recognition, speech enhancement and language model/sequence generation. Through the utilization of polynomial-based continuous convolutions, TENNs streamline models, expedite training processes and significantly diminish memory requirements, achieving notable reductions of up to 50x in parameters and 5,000x in energy consumption compared to prevailing methodologies like transformers.
Integration with BrainChip’s Akida neuromorphic hardware IP further enhances TENNs’ capabilities, enabling the realization of highly capable, portable and passively cooled edge devices. This presentation delves into the technical innovations underlying TENNs, presents real-world benchmarks, and elucidates how this cutting-edge approach is positioned to revolutionize edge AI across diverse applications.
zkStudyClub - LatticeFold: A Lattice-based Folding Scheme and its Application...Alex Pruden
Folding is a recent technique for building efficient recursive SNARKs. Several elegant folding protocols have been proposed, such as Nova, Supernova, Hypernova, Protostar, and others. However, all of them rely on an additively homomorphic commitment scheme based on discrete log, and are therefore not post-quantum secure. In this work we present LatticeFold, the first lattice-based folding protocol based on the Module SIS problem. This folding protocol naturally leads to an efficient recursive lattice-based SNARK and an efficient PCD scheme. LatticeFold supports folding low-degree relations, such as R1CS, as well as high-degree relations, such as CCS. The key challenge is to construct a secure folding protocol that works with the Ajtai commitment scheme. The difficulty, is ensuring that extracted witnesses are low norm through many rounds of folding. We present a novel technique using the sumcheck protocol to ensure that extracted witnesses are always low norm no matter how many rounds of folding are used. Our evaluation of the final proof system suggests that it is as performant as Hypernova, while providing post-quantum security.
Paper Link: https://eprint.iacr.org/2024/257
[OReilly Superstream] Occupy the Space: A grassroots guide to engineering (an...Jason Yip
The typical problem in product engineering is not bad strategy, so much as “no strategy”. This leads to confusion, lack of motivation, and incoherent action. The next time you look for a strategy and find an empty space, instead of waiting for it to be filled, I will show you how to fill it in yourself. If you’re wrong, it forces a correction. If you’re right, it helps create focus. I’ll share how I’ve approached this in the past, both what works and lessons for what didn’t work so well.
Essentials of Automations: Exploring Attributes & Automation ParametersSafe Software
Building automations in FME Flow can save time, money, and help businesses scale by eliminating data silos and providing data to stakeholders in real-time. One essential component to orchestrating complex automations is the use of attributes & automation parameters (both formerly known as “keys”). In fact, it’s unlikely you’ll ever build an Automation without using these components, but what exactly are they?
Attributes & automation parameters enable the automation author to pass data values from one automation component to the next. During this webinar, our FME Flow Specialists will cover leveraging the three types of these output attributes & parameters in FME Flow: Event, Custom, and Automation. As a bonus, they’ll also be making use of the Split-Merge Block functionality.
You’ll leave this webinar with a better understanding of how to maximize the potential of automations by making use of attributes & automation parameters, with the ultimate goal of setting your enterprise integration workflows up on autopilot.
Session 1 - Intro to Robotic Process Automation.pdfUiPathCommunity
👉 Check out our full 'Africa Series - Automation Student Developers (EN)' page to register for the full program:
https://bit.ly/Automation_Student_Kickstart
In this session, we shall introduce you to the world of automation, the UiPath Platform, and guide you on how to install and setup UiPath Studio on your Windows PC.
📕 Detailed agenda:
What is RPA? Benefits of RPA?
RPA Applications
The UiPath End-to-End Automation Platform
UiPath Studio CE Installation and Setup
💻 Extra training through UiPath Academy:
Introduction to Automation
UiPath Business Automation Platform
Explore automation development with UiPath Studio
👉 Register here for our upcoming Session 2 on June 20: Introduction to UiPath Studio Fundamentals: https://community.uipath.com/events/details/uipath-lagos-presents-session-2-introduction-to-uipath-studio-fundamentals/
In the realm of cybersecurity, offensive security practices act as a critical shield. By simulating real-world attacks in a controlled environment, these techniques expose vulnerabilities before malicious actors can exploit them. This proactive approach allows manufacturers to identify and fix weaknesses, significantly enhancing system security.
This presentation delves into the development of a system designed to mimic Galileo's Open Service signal using software-defined radio (SDR) technology. We'll begin with a foundational overview of both Global Navigation Satellite Systems (GNSS) and the intricacies of digital signal processing.
The presentation culminates in a live demonstration. We'll showcase the manipulation of Galileo's Open Service pilot signal, simulating an attack on various software and hardware systems. This practical demonstration serves to highlight the potential consequences of unaddressed vulnerabilities, emphasizing the importance of offensive security practices in safeguarding critical infrastructure.
1. UNDERGROUND ACTIVITY AND INSTITUTIONAL CHANGE: PRODUCTIVE,
PROTECTIVE AND PREDATORY BEHAVIOR IN TRANSITION ECONOMIES
EDGAR L. FEIGE**
ABSTRACT
This paper examines why some transitions are more successful than others by focusing
attention on the role of productive, protective and predatory behaviors from the perspective of
the new institutional economics. Many transition economies are characterized by a fundamental
inconsistency between formal and informal institutions. When formal and informal rules clash,
noncompliant behaviors proliferate, among them, tax evasion, corruption, bribery, organized
criminality, and theft of government property. These wealth redistributing protective and
predatory behaviors activities absorb resources that could otherwise be used for wealth
production resulting in huge transition costs.
Noncompliant behaviors--evasion, avoidance, circumvention, abuse, and/or corruption of
institutional rules--comprise what we can be termed underground economies. A variety of
underground economies can be differentiated according to the types of rules violated by the
noncompliant behaviors. The focus of the new institutional economics is on the consequences of
institutions--the rules that structure and constrain economic activity--for economic outcomes.
Underground economics is concerned with instances in which the rules are evaded,
circumvented, and violated. It seeks to determine the conditions likely to foster rule violations,
and to understand the various consequences of noncompliance with institutional rules.
Noncompliance with ‘bad” rules may actually foster development whereas non compliance with
“good” rules will hinder development. Since rules differ, both the nature and consequences of
rule violations will therefore depend on the particular rules violated. Institutional economics and
underground economics are therefore highly complementary. The former examines the rules of
the game, the latter the strategic responses of individuals and organizations to those rules.
Economic performance depends on both the nature of the rules and the extent of compliance with
them.
Institutions therefore do affect economic performance, but it is not always obvious which
institutional rules dominate. Where formal and informal institutions are coherent and consistent,
the incentives produced by the formal rules will affect economic outcomes. Under these
circumstances, the rule of law typically secures property rights, reduces uncertainty, and lowers
transaction costs. In regimes of discretionary authority where formal institutions conflict with
informal norms, noncompliance with the formal rules becomes pervasive, and underground
economic activity is consequential for economic outcomes.
JEL classification: P2 O17 P14 H2 H3 K4 O5 H26
Keywords: transition economies, underground economies, institutions, property rights,
transaction costs, tax evasion, corruption, rent seeking.
Forthcoming in Transforming Post-Communist Political Economies Nelson, Tilly and Walker
(eds), National Academy Press, Washington, DC 1997
** Professor of Economics, University of Wisconsin-Madison –(elfeige@wisc.edu)
2. UNDERGROUND ACTIVITY AND INSTITUTIONAL CHANGE: PRODUCTIVE,
PROTECTIVE AND PREDATORY BEHAVIOR IN TRANSITION ECONOMIES
Edgar L. Feige*
“The more corrupt the state, the more numerous the laws.”
Tacitus History, III c. 100
“Laws like cobwebs, entangle the weak, but are broken by the strong.”
Ascribed to Solon c. 575 B.C.
INSTITUTIONS AND ECONOMIC PERFORMANCE
North (1990) has persuasively argued that institutions matter insofar as they affect
economic outcomes, but we still lack an explicit formulation of the critical relationship between
institutional arrangements and economic performance. From the perspective of economic
history, the institutional change that shapes the evolution of societies is seen as “overwhelmingly
incremental” and highly “path dependent.” How then, are we to reconcile this “glacial” view of
institutional change with the radical transformations now under way in Central and Eastern
Europe and in the New Independent States (NIS) of the former Soviet Union? Are these
revolutions less revolutionary and less discontinuous than they appear? What will ultimately
determine their outcomes? North (1990: 91) suggests that the outcomes of revolutionary
changes will depend on “the ongoing tension between informal constraints and the new formal
rules.” Formal institutions have indeed changed radically in the former Soviet Union, but
informal institutions much less so. What then can we learn from a closer examination of the
informal conventions, particularly when these include norms of noncompliance with the formal
rules?
* Professor of Economics, University of Wisconsin-Madison –(elfeige@wisc.edu)
3. This paper attempts to identify some of the critical components of the institutional matrix
that motivates behavior, the types of behaviors most likely to affect economic performance, and
the complexity of the relationship linking the two. They provide us with valuable hints as to
where we must look to discover just how institutions determine economic performance.
The historical laboratory of the transition economies has revealed that liberalization,
stabilization, and privatization may be necessary but are by no means sufficient conditions for
creating “market economies.” Every market presupposes the existence of property rights to be
traded. When these rights are established, supported, and enforced in a transparent, even-handed
manner under the rule of law, the transaction costs of exchange are significantly reduced, and
economic outcomes are likely to be improved. Many of the transition economies have yet to
establish the rule of law, and suffer instead from the legacy of regimes of arbitrary discretion that
encouraged noncompliant behavior as the informal norm.
If we are to understand why some transitions have been relatively rapid and successful
while others have languished and suffered from huge adjustment costs, we must examine how
each society has structured the relative incentives for productive, protective, and predatory
behaviors. These incentive structures are unlikely to be transparent, particularly when there is a
lack of coherence between formal and informal institutions. When formal and informal
institutions clash, noncompliant behaviors proliferate, among them, tax evasion, corruption,
bribery, organized criminality, and theft of government property.
Many of the centrally planned economies suffered from fundamental inconsistencies
between formal and informal institutions. Consequentially, the transition process had to deal
with a legacy of noncompliant behaviors involving protective and predatory activities. One of
the great challenges for a successful transformation is determining how to restructure institutions
and incentives so that resources are redirected toward productive outcomes.
PRODUCTION, PROTECTION, AND PREDATION
4. Societies allocate scarce resources to produce, protect, and redistribute wealth. A
nation’s growth--its ability to produce new wealth--will be determined by its technology, the
quality and quantity of its total resource endowment, and the amounts of resources employed in
the protection and redistribution of existing wealth. Those resources not devoted to protective
and acquisitive activities can be allocated to the production of new wealth.
As the administrative mechanisms of central planning give way to market allocations,
and state ownership is replaced by private property rights, economic behavior is guided by a
radically altered system of incentives, sanctions, and opportunities. Given these new
institutional rules, individuals and organizations must make strategic decisions about the
allocation of their scarce resources among productive, protective, and predatory activities. We
might conjecture that the most constructive form of institutional change is that which provides
incentives to direct resources away from protective and acquisitive activities and toward
productive ones.
Production costs reflect the transformation of inputs into outputs. Transactions costs are
associated with the acquisition, protection, and transfer of property rights. The linkage between
institutions and economic performance depends critically on the incentive structures that flow
from property rights. Efficient institutions provide incentives to minimize the sum of production
and transaction costs. When property rights are uncertain and insecure, difficult to measure and
monitor, costly to enforce, and inconvenient to trade, transaction costs are high, and considerable
resources must be employed for the protection and redistribution of wealth. Conversely, when
institutions are successful at reducing these transaction costs, resources are freed to enhance
economic performance.
Institutions generate and enforce rules of behavior and rules of procedure. Rules of
behavior structure incentives and constraints on permissible activities; rules of procedure specify
acceptable means for amending and modifying the existing rules. Institutional change can occur
in either a prescribed or a proscribed manner. Prescribed institutional change is in accordance
with a society’s rules of procedure, whereas proscribed institutional change comes about when
5. behavioral and procedural rules are broadly violated. Noncompliance with formal rules changes
institutions. Prescribed change is typically smooth and gradual, whereas proscribed change,
resulting from noncompliance with existing rules, typically appears to be traumatic and radical.
Underground economies are characterized by noncompliant economic behaviors
involving evasion, avoidance, circumvention, abuse, and/or corruption of the rules, as well as
accompanying efforts to conceal these illicit behaviors from the view of public authorities.
Noncompliance is responsible for many of the unintended consequences that often result from
policy reforms. The effort to conceal underground activity systematically distorts conventional
information systems and thereby complicates efforts to observe and monitor the consequences of
policy reforms. These consequences and the way they are perceived thus depend in large
measure on the extent to which individuals and organizations comply with the new rules. The
choice to comply or not depends on the relevant incentives and sanctions and is often
conditioned by the institutional structure that prevailed in the pre-transition period. Therefore,
institutional change is likely to be path dependent.
When rules are circumvented by widespread noncompliance, economic performance is
likely to be powerfully affected. Since institutional change is the defining feature of transition
economies, any inquiry into the causes and ultimate consequences of the transition must include
an analysis of the incentives and sanctions governing various types of underground economic
activities. Indeed, the perception, nature, and consequences of noncompliant behaviors depend
on the particular rules being violated. Any analysis of institutional change in the context of
transitional economies must address the consequences of noncompliant behavior as manifest in
different underground economies. These include the widely observed occurrences of bribery,
corruption, organized crime, financial scams, tax evasion, property theft, smuggling, money
laundering, and extortion.
Formal and Informal Institutions
6. Institutions represent the rules that constrain human behaviors by affecting the expected
payoffs for economic actors. But there are many types of institutions, spanning formal legal
systems and informal customs and norms. Particularly in times of social transformation, the
rules of different institutions may be discordant. Eggertsson (1997) points out that “the primary
weakness of the economics of institutions is its limited understanding of the amalgam of formal
and informal rules and their attendant enforcement mechanisms.”
When the institutional amalgam is hierarchical, consistent, and complementary, we most
easily discern effective rules by studying their codification in formal institutions. Coherence
between formal and informal norms simplifies the task of defining and enforcing acceptable
behavior. Compliance with the existing institutional rules is the dominant behavior.
When formal and informal rules are inconsistent or in conflict, the effective rules
germane to economic performance will depend on the extent to which individuals and
organizations comply with the formal rules. Observation of widespread noncompliant behavior
signals a formal system in distress. The study of noncompliant behaviors (underground
activities) and the incentive structures that induce these behaviors provides a powerful diagnostic
tool for identifying which informal institutions effectively motivate relevant economic outcomes.
Leitzel (1997) points out that “while evasive behavior complicates the effort to analyze the
impact of policies, it can promote reform” by attracting the attention of policy makers, who can
then either increase enforcement or legitimate the noncompliant behavior through liberalization
of the rules.
Noncompliant Behaviors
Changing incentive structures affect the relative costs and benefits of complying with a
newly evolving system of rules. Noncompliant behaviors--evasion, avoidance, circumvention,
abuse, and/or corruption of institutional rules--comprise what we can be termed underground
economies. A variety of underground economies can be differentiated according to the types of
rules violated by the noncompliant behaviors.
7. Noncompliant behaviors are often the source of the unintended consequences observed in
the aftermath of policy reforms. Moreover, since such behaviors are subject to penalties, rule
violators will attempt to conceal them from public view. Successful concealment distorts
information and hinders our ability to perceive and interpret correctly the outcomes of policy
reforms.
Radical institutional reform often creates a climate rife with noncompliant behaviors.
The extent, nature, and consequences of underground economic activity will affect the impact of
institutional change on economic outcomes. The study of noncompliance in transition
economies is likely to yield the most revealing view of the effective prevailing incentive
structure, of the critical strategic behaviors induced by that structure, and thus of the outcomes of
policy changes.
Institutional Economics and Underground Economics
The focus of the new institutional economics is on the consequences of institutions--the
rules that structure and constrain economic activity--for economic outcomes. Underground
economics is concerned with instances in which the rules are evaded, circumvented, and
violated. It seeks to determine the conditions likely to foster rule violations, and to understand
the various consequences of noncompliance with institutional rules. The greater the expected net
benefit from noncompliance, the higher its expected incidence. Since rules differ, both the
nature and consequences of rule violations will depend on the particular rules violated.
Institutional economics and underground economics are therefore highly complementary. The
former examines the rules of the game, the latter the strategic responses of individuals and
organizations to those rules. Economic performance depends on both the nature of the rules and
the extent of compliance with them.
There are, of course, as many noncompliant activities as there are rules to be violated.
Feige (1990a) has shown that underground economies comprise similar types of noncompliant
behaviors. For example, when fiscal rules are violated, tax evasion and benefit fraud behaviors
8. are said to comprise the unreported economy. As suggested earlier, rule violators, mindful of
penalties, will typically seek to conceal their behavior from public authorities. When income-
producing activities are concealed and thus cannot be appropriately included in national income
accounts, accounting conventions are violated, creating an unrecorded economy. Those
activities involving the abuse of public office for private gain constitute the corruption economy.
More generally, those activities that violate the rules prohibiting extortion, financial fraud,
smuggling, organized crime, and theft of state property are examples of illegal economy
activities.
Consequences of Noncompliance
There is a growing literature expressing concern about the prevalence of illegal activities
and their corrosive effects. However, Leitzel (1997) reminds us that, as noted above, the
consequences of various noncompliant behaviors depend critically on the nature of the rules
being violated. The violation of “bad” rules--“those that prohibit voluntary exchanges--in the
absence of negative third party effects”-- may actually have positive economic consequences.1
De Soto (1989) argues that noncompliant behaviors that circumvent onerous regulations in
developing countries effectively reduce transaction costs and therefore should be encouraged and
legitimated. Corruption can also be viewed as a means of circumventing bureaucratic obstacles
with "speed money," and even organized crime has been cited as a means of providing
enforcement of property rights when the state is weak and ineffectual.
The evasion, circumvention, and violation of “good” rules--those that prohibit and
regulate coercive behaviors-- are likely to make society worse off. In the parlance of
institutional analysis, whenever noncompliance increases uncertainty and the costs of measuring
and monitoring behavior, it raises transaction costs and is likely to have damaging social
consequences. Indeed, the weight of the evidence appears to be shifting in the direction of
1 Similar arguments can be found in Leff (1966) and Huntington (1968).
9. uncovering the long-term damage that result from pervasive noncompliance, particularly in the
form of corruption and organized crime. Bribery and corruption often encourage the
bureaucracy simply to create additional artificial administrative hurdles in order to receive side
payments for their removal. At the same time, organized crime and corruption are seen as a
growing menace to new business establishments and as a major barrier discouraging foreign
capital investments.
The extent of noncompliance is also an important factor when threshold effects dominate
the dynamics of institutional change. Low levels of noncompliance with bad rules might provide
a useful buffer against the negative effects of the bad rules, but widespread noncompliance can
undermine the social fabric and erode political legitimacy, thereby jeopardizing the fundamental
principle of the rule of law.
There is now an ongoing debate (see Grossman, 1989; De Soto, 1989; Klitgaard, 1991;
Leitzel et al., 1995; Trang, 1994; Alexeev, 1997; Lotspeich, 1995; Shelley, 1995; Tanzi, 1994;
Anderson, 1995; and Mauro, 1995) concerning the consequences of various types of
noncompliant behaviors. Analysis of noncompliance under the Soviet regime suggests that the
circumvention of price and production controls contributed to a more efficient system and served
to buffer some of the most costly consequences of allocation by administrative control. The
buffer function may have extended the lifetime of the Soviet regime by ameliorating some of the
costs of misallocation. But, as discussed below, the pervasiveness of noncompliance under the
Soviet regime has had a pernicious effect on subsequent economic reforms.
The Legacy of Noncompliance
If we are to understand the severe adjustment costs sustained during the transition
process, particularly in the NIS, we must examine the institutional structure of the earlier Soviet
regime and the legacy of noncompliant “second-economy” behaviors induced by its perverse
incentive systems (Grossman, 1977). The Soviet Union’s criminal code prohibited most of the
private economic activities regarded as normal in Western market economies. Despite heavy
10. penalties, however, noncompliance with the formal laws was the rule rather than the exception.
Handleman (1995:275) describes the Soviet Union as the “world’s most heavily policed state.”
Yet paradoxically, it functioned as an essentially lawless society.
Grossman (1992:220) has pointed out that if one were to attempt to characterize the
conditions likely to “maximize the scope and size of a country’s underground economy,” one
would effectively describe Soviet-type socialism. A shortage economy with state-controlled
prices well below black market prices created significant incentives for internal arbitrage and
speculation. Similar gaps between world prices of tradables and controlled domestic prices
encouraged international smuggling. The prevalence of amorphous property rights and lax
controls over state assets made the theft of state assets a pervasive predatory activity. Low
administrative salaries combined with powerful governmental authority created rent-generating
opportunities for bribery and corruption to flourish. In short, the economic incentives to engage
in economic crimes were substantial, but so were the penalties.
Feldbrugge (1989) describes how the formal legal system treated economic crimes.
Economic activities regarded as normal in market economies not only were prohibited under
Soviet law, but also carried heavy penalties. Private enterprise and commercial middleman
activities carried a maximum penalty of 5 years in prison, while speculation drew a 7 year term.
Bribery and theft of state property were punishable by 15 years’ imprisonment and death.
Despite this stiff menu of punishments, these activities were commonplace, and indeed virtually
necessary to maintain minimum living standards.
In fact, economic crimes were broadly tolerated by the Soviet regime. They served to
buffer the economy from the misallocation failures of the administrative system, and acted as a
means of enforcing strict political control. Tacit permission to engage in economic crimes
served as a means to reward the nomenklatura and its clients, while the arbitrary threat of
enforcing the law provided a means of maintaining strict control over political dissent.
Noncompliance with the rules was so pervasive that illegal activities comprised a vast
underground economy known as the second economy. Virtually every citizen was a de facto
11. criminal by dint of engaging in one or more common economic crimes. Citizens were reinforced
in the expectation that no punishment would be exacted if one complied with the strict codes for
appropriate political behavior. These included informal conventions signaling the extent to
which different levels of the political hierarchy could dip into the pot of forbidden economic
riches. Permitting a pervasive underground economy served as a means of controlling political
dissention, rewarding elites, and buffering the hardships imposed by the inefficiencies of central
planning. The resulting regime of arbitrary discretion was the antithesis of the rule of law.
The Rule of Law and the Regime of Arbitrary Discretion
Under the rule of law, conduct is governed by formal statutes and judicial agencies that
offer and deliver access and equal protection to all citizens. Institutional control is exercised by
the even-handed application of formal rules. The norm for behavior is compliance with the
rules. When the rules are violated, a credible system of effective punishment of violators comes
into play. Thus control is based on “the application of the law.”2
Under the Soviet regime of arbitrary discretion, most common conduct was prohibited by
formal law, but enforced capriciously at the discretion of those in authority. Access to the
system’s institutional rewards and protections was reserved for the privileged few, but even then
remained uncertain and uncontrolled by law. The norm of behavior was noncompliance with the
rules. Penalties were assessed only rarely, and then only at the discretion or whim of the
privileged elite that held effective power. Control was based on infringement of the rules, and
involved both the carrot and the stick. The carrot consisted of granting the nomenklatura use
rights over scare resources, whereas the stick consisted of the threat to exact punishment for the
commission of economic crimes.
2In describing the prereform Hungarian system Gabor (1989:347) distinguishes between “control based on the
application of rules and “control based on the infringement of rules.”
12. Implications of the Legacy of Noncompliance
The regime of arbitrary discretion was the legacy and operative institution that survived
the collapse of communism. Polishchuk (1997) ascribes some of the lack of progress in Russian
reforms to the “institutional void” characterized by “missing markets.” But the formal
“institutional vacuum” was in fact filled with dominant informal rules that defined de facto
property rights and incentives that guided resource allocation in the second economy. Rent-
seeking, rent-creating and, rent-exploiting activities were pervasive.
In the transition period, policymakers hoped that “organic growth” would produce the
political and economic institutions needed to support market activities, essentially leaving the
market to create the market. But this policy of benign neglect failed to produce the desired rule
of law. This was due not only to the lack of a broad constituency for building market-supporting
institutions, but also to the inertia of the informal norms of noncompliance.
When reforms did occur, they often legitimated the system of noncompliance that was
already in place. World Bank (1996) estimates of unofficial activities suggest that in a sample of
Central and Eastern European countries, the underground economy increased from 18 to 22
percent between 1989 and 1994. For a sample of NIS countries, the underground economy
appeared to grow from 12 to 37 percent during the same period. Increased noncompliance was
associated with weakened political controls, higher tax rates, and incomplete liberalization.
Liberalization served to legitimate the pervasive black markets by legalizing speculation
and arbitrage. The freeing of prices conferred market value on many of the inventories
accumulated as illegitimate wealth stocks under the Soviet regime. The creation of internal and
external ruble convertibility and the liberalization permitting the accumulation of co-circulating
foreign currencies legitimated illegal stores of monetary wealth. Thus the reforms simply
legitimated much of the behavior that had already existed in the pre-transition period. In this
sphere, the revolution was less than revolutionary and proved to be highly path dependent.
Privatization legitimated the personal appropriation of state property by placing
previously amorphous property rights to state assets directly in the hands of private actors.
13. Privatization created the opportunity for privileged elites with information and network
advantages to convert limited de facto use and income rights into more valuable de jure alienable
rights. Not only did privatization legitimize de facto property rights, but it offered a huge
incentive to allocate resources to protective and acquisitive activities. The preference for
predation over production was tied to the opportunity to capitalize long-term income streams by
obtaining de jure alienation rights.
The uncertainty associated with tentative property rights also encourages appropriation of
state property and discourages the type of productive investment that would normally be
associated with longer economic horizons. The expected rewards from rent-seeking activities
simply dwarf the expected returns from productive activities. Rent seeking will continue to
dominate as long as there are valuable unassigned property rights in the public domain, still
available for privatization.
The legacy of noncompliance inherited from the pre-transition period was accompanied
by a pervasive distrust of government. A history of policy reversals and arbitrary confiscations
had destroyed the credibility of government pronouncements and policies. Thus, the informal
norm of distrusting government policy militates against every effort to establish the formal rule
of law. In the absence of effective state institutions that can protect and enforce newly created
property rights, these rights will remain uncertain and their exercise will involve high transaction
costs.
In this effectively stateless and lawless environment, organized crime can provide a
locus of authority for contract enforcement and the adjudication of contested property rights.
Thus, organized crime performs a substitute enforcement service that reduces uncertainty, albeit
at a high social cost. Unfortunately, the economies of scale that normally accrue to legitimate
governmental institutions now accrue to the mafia. Those public officials that retain the
bureaucratic power to assign remaining public-domain property rights will continue to exploit
their authority, reinforcing the legacy of corruption.
14. Although tax evasion existed in the pre-transition period, most taxes were collected
implicitly by paying labor less than the value of its marginal product and by limiting the
consumption of goods and services. In market-oriented economies, resources are paid the value
of their marginal product, and taxes are subsequently collected explicitly on resource earnings.
When liberalization eliminated price controls for goods and factors, the implicit tax revenue
collection mechanisms collapsed, and the state suffered a significant loss of revenue, which in
turn bloated budget deficits. These deficits could be financed either by creating money or by
borrowing from the public. Printing money to finance the deficit simply fueled inflation and
compounded the disruptive effects of the transition. It eroded the fixed incomes of the working
poor and pensioners, and disguised the relative price signals of the fledgling market economy
with shocks to the general price level.
The legacy of distrust of government also precluded the government from financing its
deficit with the sale of public debt. In desperation, the government embraced the same informal
convention of nonpayment that had been adopted by large firms. Nonpayment by firms created
inter-industry arrears. When the government refused to make payments for wages and pensions,
it effectively forced an unwilling public to accept government debt in the form of government
expenditure arrears.
Another legacy of the pre-reform system was a highly skewed distribution of wealth and
information. Although incomes were distributed quite equitably, differential access to state
resources and selective opportunities for illegal wealth accumulation created a highly unequal
distribution of de facto property rights. The opportunity to convert and capitalize these de facto
rights into de jure rights created a small but powerful constituency for selective privatization, but
not necessarily one that would support generalized property rights.
Corruption is perhaps the most troubling legacy of the pre-transition period, and threatens
the dynamic stability of the transition process. Corruption occurs at the juncture were public and
private sectors meet. When public officials are granted authority to license, prohibit, tax, or
subsidize economic activities, allocate favorable exchange rates, enforce trade restrictions or
15. price controls, distribute valuable property rights and natural resource endowments--monopoly
powers are created in the public domain. Corruption is a form of government failure that occurs
when public officials, acting as the agents of the state, exploit the state’s monopoly powers for
their personal advantage. Corruption involves noncompliance with the rules governing
appropriate conduct in public office.
The extent of noncompliance will depend upon the expected gains and penalties which
according to Klitgaard (1988) are determined by the monopoly power to be exploited, the extent
of discretion granted the agent of the government and the degree to which the agent is held
accountable. The economic cost of corruption depends not only on its extent, but also on its
nature. Shleifer and Vishny (1993) present an industrial organization model of corruption that
shows that corruption is less costly when it is controlled by an effective cartel, like the rule of
arbitrary discretion imposed by the Communist party in the former Soviet Union. In this case,
payment of a bribe is sufficient to assure the predictable transfer of the scarce property right and
the bribe price is kept in check. The most costly form of corruption occurs when independent
monopolists vie for bribes. This model best describes the current situation in the NIS, were
corruption is omnipresent, yet property right transfers remain uncertain and unpredictable even
after bribes have been paid. With vast, highly prized property rights in the public domain,
controlled by independent monopolists whose actions are unconstrained by accountability and
the rule of law, predation dominates production with devastating economic consequences.
Building a Constituency for the Rule of Law
The legacy of noncompliance with formal rules and the concomitant distrust of public
policy have resulted in great resistance to the necessary establishment of the rule of law to
support and complement the still fragile property rights and market institutions of the
transforming economies. The earliest privatization schemes proposed to transition governments
attempted to build a powerful constituency for reform institutions by creating a massive class of
private shareholders (Feige, 1990b,1990c). Privatization had to be demanded by the populace
16. for there were no institutions to coerce citizen participation. It was hoped that the creation of a
new egalitarian base of holders of residual property rights would produce a political lobby to
establish and protect property rights as well as political pressures to improve corporate
governance structures. These structures, in turn, would maximize the value of the residual
property rights themselves. In addition to these incentive effects, it was hoped that the equitable
distribution of valued assets would serve as a safety net to cushion the inevitable decline in other
government support programs.
Polishchuk (1997) argues that this program failed in its first goal, “to prevent the rapid
growth of inequality and to compensate for the loss of private savings to inflation,” while it is
still unclear whether the program has helped to build a constituency to protect property rights. In
Russia, the scale of the privatization program was massive, creating a class of 50 million
shareholders.3 Nevertheless, the failure to include “anti-carpetbagger” provisions (see Feige
(1990b) to protect the residual property rights of the poorly informed public permitted wealth
holdings to become even more highly skewed. Russian enterprise insiders obtained, on average,
two-thirds of the mass privatization shares. By 1996, “all employees owned an average of 58
percent of the stock.” (Blasi, et. al (1997:54). Although a key objective of the privatization
program was to break the dependency linkage between enterprise managers and politicians, “the
tie proved more durable than many observers had believed or hoped.” Blasi et. al. (1997:38)
SUMMARY
3 Nellis (1996) reports that by the end of 1994, the 15 transition countries of Central and Eastern Europe and the
NIS privatized more than 30,000 large and medium-sized firms. In Russia, 16,000 large and medium-sized firms
and 75,000 small business were privatized. However, an estimated 10,000 large and medium-sized firms are as yet
not privatized. Blasi,et.al. (1997:26) report that by the beginning of 1996, “77.2 percent of mid-sized and large
enterprises were privatized.” Moreover, some 900,000 new small businesses were established representing 82
percent of shops and retail stores employing 9 million people. Yet of 67 million employed Russians, “no more than
27 million are in the private sector.”
17. The stubborn legacy of informal pre-transition norms and behaviors dominates the
transition economies. Those pre-transition economies whose formal and informal institutions
were relatively coherent had less of a legacy of noncompliance to confound the transition
adjustment. But those economies in which the formal rules were largely observed in their
breach inherited a profound legacy of noncompliance and distrust of government. They are also
characterized by acceptance of a wide range of protective and predatory behaviors that impose
severe adjustment costs on the transformation process. In this important sense, institutions
matter, institutional change is highly path dependent, and it is less revolutionary than may appear
at first blush.
Institutions do affect economic performance, but it is not always obvious which
institutional rules dominate. Where formal and informal institutions are coherent and consistent,
the incentives produced by the formal rules will affect economic outcomes. Under these
circumstances, the rule of law typically secures property rights, reduces uncertainty, and lowers
transaction costs. In regimes of discretionary authority where formal institutions conflict with
informal norms, noncompliance with the formal rules becomes pervasive, and underground
economic activity is consequential for economic outcomes.
Many of the behaviors that violated the formal rules of pre-transition societies have now
become legitimized in the transition period. Legitimization has been accomplished by efforts to
liberalize, privatize, and legalize. Incomplete liberalization--the maintenance of arbitrary gaps
between buy and sell prices--produces incentives for rent-seeking, acquisitive behaviors.
Incomplete privatization--the maintenance of valuable assets in the public domain with
amorphous property rights--produces incentives for predation. Incomplete legalization--the
maintenance of arbitrary discretion in place of the rule of law--sustains high levels of uncertainty
and high transaction costs, and discourages the reallocation of resources to productive activities.
The formal rules in most of the former Soviet republics are still very far from being
incentive compatible and many aspects of the old system persist unchanged. Regulatory burdens
and the number of regulatory agencies have ballooned, yet the legacy of noncompliance prevails
18. and independent monopolists willfully exploit property rights that remain in the public domain.
The tax authority is confiscatory, and organized crime extorts private taxes. The wealth still
open to rent-seeking is immense. In short, the incentive structure is such that protective and
predatory behaviors tend to dominate productive behaviors with the result that lost production,
corruption and a growing disparity in wealth threatens the success of the fragile process of
transition.
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