Search

Much entrepreneurship research has focused on explaining why some countries and regions have more entrepreneurial activity than others, and the role played in this regard by cross-national and cross-regional differences in institutions. However, this stream has not considered entrepreneurship from a process perspective that is, as a set of activities that unfold over different, discernible stages, and has therefore not examined how institutions and policies impact entrepreneurship in different stages of the process. To address this highly policy-relevant gap, we consider the role of institutions for both nascent and realized entrepreneurship, combining cross-country data of entrepreneurial nascency and start-up activity with standard measures of institutions in structural models to obtain estimates of the moderating and mediating effects of policies and institutions of different quality. Analyzing data on early entrepreneurial activities from the Global Entrepreneurship Monitor, data on new firm formation from the World Bank, and Economic Freedom of the World and Doing Business data, we find that a larger government sector leads to lower levels of both measures of entrepreneurship, while legal quality only impacts later-stage entrepreneurship. In general, the main impact of institutions lies in the later stage of entrepreneurship. We suggest that attention allocation by entrepreneurs may help explain these findings.

Populists since the Roman Republic have argued for redistribution from an elite to ordinary people and depicted themselves as the true representative of the ‘people’. However, very little research has explored whether populists actually affect the distribution of income or consumption when in power. The present paper therefore asks, whether populists admin- istrations actually achieve redistribution. After a short theoretical discussion, our empirical strategy combines new data on populism in Latin America and the Caribbean with infor- mation on income and consumption inequality since 1970. Estimates suggest that populist governments in the region generally have achieved no redistribution, leading us to con- clude that the redistributive aims of populists are mainly empty rhetoric.

There is scant systematic empirical evidence on what explains variation in academic freedom. Making use of a new indicator and panel data covering 64 countries 1960–2017, we investigate how de facto academic freedom is affected by, in particular, political institutions. We find that moving to electoral democracy is positive, as is moving to electoral autocracy from other autocratic systems, suggesting the importance of elections. Communism has a strongly detrimental effect. Legislatures that are bicameral are associated with more academic freedom, while legislatures that become more diverse and more ideologically to the right also seem to stimulate this type of freedom. Presidentialism and coups do not appear to matter much, while more proportional electoral systems strengthen academic freedom. More judicial accountability stimulates academic freedom, and richer countries experience more of it. The results suggest that the political sphere exerts a clear but complex influence on the degree to which scholarly activities are free.

Claims that colonial political institutions fundamentally affected the probability for democratic governance in the post-colonial period are probably among some of the most contested in institutional analysis. The current paper revisits this literature using a previously unused source of empirical information – the Statesman's Yearbook – on a large number of non-sovereign countries in the immediate aftermath of World War II. Our analysis shows that neither the size of the European population nor the existence of institutions of higher education appear to be important for the subsequent democratisation of countries decolonised during the latter half of the 20th century, while the existence of representative political bodies during the late colonial period clearly predicts the existence and stability of democracy in recent decades. Successful transplants of democracy to former colonies thus seem to crucially depend on whether recipients had time available to experiment around and adjust the imported institutions to local practices.

The COVID-19 pandemic has not only caused millions to die and even more to lose their jobs, it has also prompted more governments to simultaneously declare a state of emergency than ever before enabling us to compare their decisions more directly. States of emergency usually imply the extension of executive powers that diminishes the powers of other branches of government, as well as to the civil liberties of individuals. Here, we analyze the use of emergency provisions during the first wave of the COVID-19 pandemic and find that it can be largely explained by drawing on political economy. It does, hence, not constitute an exception. We show that many governments have (mis-)used the pandemic as a pretext to curtail media freedom. We further show that executive decrees are considered as a substitute for states of emergency by many governments.

Consequences of social trust are comparatively well studied, while its societal determinants are often subject to debate. This paper studies both in the context of Catalan attempts to secede from Spain: First, we test if Catalonia enjoys higher levels of social capital that it is prevented from capitalizing on. Second, the paper examines whether secessionist movements create animosity and political divisions within society that undermine trust. Employing the eight available waves of the European Social Survey for Spain, we show that social trust levels are not higher in Catalonia than in the rest of the country. However, we find indications of a significant regional increase after secession became a real option in 2014. We argue that this finding is a likely result of the mental process of nation building, indicating that the formation of social trust may best be thought of as a stable punctuated equilibrium.

Much political conflict in the world revolves around the issue of how much freedom to accord people. Liberal democracies are characterized by, e.g., the rule of law and a strong protection of civil rights, giving individuals a great deal of legally guaranteed freedom to lead their lives as they see fit. However, it is not known whether legal freedom suffices to make people satisfied with freedom. Our study explores that issue by relating seven indicators of legal freedom to the satisfaction people express with their freedom of choice. Using a sample of 133 countries over the period 2008–2018, and taking a panel-data approach, we find no robust baseline relationship. However, when exploring conditional associations by interacting the indicators with social trust, the rule of law is positively and increasingly related to satisfaction with freedom above and below a threshold level. Freedom of assembly is more positive for satisfaction with freedom the higher the GDP per capita and in democracies. Thus, for some types of legal freedom, formal legal institutions are complementary with culture, income and the political system in generating satisfaction with freedom.

This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in social trust. We note a number of theoretical mechanisms that suggest that macroeconomic shocks are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates across middle- and high-income countries reveals that interest rates and credit ratings are substantially more sensitive to inflation and growth problems in low-trust countries. This finding sheds light on the differential market reactions to macroeconomic problems in seemingly comparable countries.

Previous research has indicated that constitutionalized emergency provisions effectively constrain the behaviour of democratic governments subsequent to terrorist attacks. In this article, we ask if this is also true for autocratic governments. Are non-democratic governments equally subject to constitutionalized constraints regarding their reactions to emergencies and particularly to terrorist attacks? To answer the question, we analyse the behaviour of a specific group of predominantly autocratic governments that are particularly subject to frequent terrorist incidents, namely the states that are members of the Organisation of Islamic Cooperation. Employing data on terrorist activity from the Global Terrorism Database and constitutional data from the Index of Emergency Powers, we estimate the association between constitutionalized constraints and terrorist attacks in a dataset covering 48 member-states of the organization observed annually between 1970 and 2014. As hypothesized, we find that emergency constitutions that politically make it relatively cheap for governments to declare a state of emergency are more likely to be invoked. In addition, we find that governments are more likely to increase repression after terrorist events when the constitution allocates more discretionary power to the government in emergencies. Our evidence thus suggests that emergency constitutions also impact on the behaviour of largely autocratic governments.

It is often assumed that there is a trade-off between civil rights and national safety although the association is theoretically ambiguous. This article therefore explores this association by estimating the effect of degrees of freedom of expression on the risk of terrorist attacks. We first note that different theoretical arguments support both a positive and negative association between freedom of expression and terrorism. We explore this association empirically in a large panel of 162 countries observed between 1970 and 2016. Distinguishing between media freedom and discussion freedom, and separating democracies and autocracies, we find that discussion freedom is unambiguously associated with less terrorism in democracies.

A vast economic literature examines the welfare gains and distributional consequences of economic reforms, while much less is generally known on the relationship of inequality and forced regime changes. Some studies analyze how economic inequality impacts the likelihood of coups, but the distributional outcomes of such events have been largely ignored to date. This study helps to fill that gap by examining the effect of coups on the distribution of consumption and income within countries. Employing novel data, we find that successful coups have a significant positive impact on the consumption shares of the lowest quintile, and a strong negative impact on the highest quintile. In turn, no significant redistribution is caused by failed coups. The redistributive effect is stronger for civil coups, as compared to military coups. Despite their negative impact on overall growth and per capita income, our results show that forced regime changes reduce inequality at a short notice, partially explaining their continued popularity in highly unequal developing countries.

Nine out of 10 constitutions contain explicit emergency provisions, intended to help governments cope with extraordinary events that endanger many people or the existence of the state. We ask two questions: (1) does the constitutionalization of emergency provisions help governments to cope with disasters and other extraordinary events? (2) What particular parts of emergency constitutions fare best? We find that the more advantages emergency constitutions confer to the executive, the higher the number of people killed as a consequence of a natural disaster, controlling for its severity. As this is an unexpected result, we discuss a number of potential explanations, the most plausible being that governments use natural disasters as a pretext to enhance their power. Furthermore, the easier it is to call a state of emergency, the larger the negative effects on basic human rights. Interestingly, presidential democracies are better able to cope with natural disasters than parliamentary ones in terms of lives saved, whereas autocracies do significantly worse in the sense that empowerment rights seriously suffer in the aftermath of a disaster.

Media freedom is important not only for the quality of life in a country, but also for its investment climate, as a free press is essential for holding politicians accountable. This is the first global study of how coups affect media freedom. We argue that the effect of a coup should depend on whether it is successful, whether the targeted country is democratic and how much of the economy it controls, and on the presence of constitutional rules protecting media freedom. Our empirical analysis shows that all these factors, except constitutional rules, matter for whether media freedom declines after a coup. Reductions are unlikely after failed coups, coups against autocracies or coups against very “small” governments. Activists, policy makers and businesspeople should pay close attention to the media sector after a successful coup against a democracy with a moderate or big size of government.

I explore the association between the severity of lockdown policies in the first half of 2020 and mortality rates. Using two indices from the Blavatnik Centre’s COVID-19 policy measures and comparing weekly mortality rates from 24 European countries in the first halves of 2017–2020, addressing policy endogeneity in two different ways, and taking timing into account, I find no clear association between lockdown policies and mortality development.

Recent work in Cohn et al. (2019) shows that civic honesty and cooperative behaviour captured in a wallet-return experiment varies considerably across the world. Similarly, beliefs about social trust vary substantially as revealed by a multitude of cross-national questionnaire-based surveys. Previous studies have questioned whether survey-based measures correlate with honest and cooperative behaviour at the individual level. This paper uses the new data from Cohn et al. (2019) to test the association between cooperative behaviour and the trust culture captured in questionnaires. Comparisons of wallet return rates and questionnaire trust across 38 countries and 105 European regions show that experimental behaviour and social trust measured in questionnaires are strongly correlated.

Coups and regime transitions are events that typically are intended to change the basic institutional framework of a country. Which specific institutions change and the consequences of these changes nevertheless remains largely unknown. Change after a coup or transition implies that some form of political or judiciary barrier has been erected or removed. We therefore focus on what happens to the quality of judicial institutions and political corruption around coup attempts and other types of regime transitions. We hypothesize that when coups are conducted by members of the incumbent political elite, they are likely to remove barriers to change while coup makers outside of the ruling elite are more likely to do the opposite and thus protect themselves from what remains of the elite in the political system. Using the new Bjornskov-Rode coup dataset, our results suggest that successful coups are associated with degradation of institutions, with successful military coups in particular having a significant negative effect. Results are more varied for civilian coups where we find indications of differences depending on whether the coup makers are part of a political elite or not. We also explore whether the incumbent regime influences the effect of coup attempts on institutional change.

While the association between economic freedom and long‐term economic growth has been well documented, the parallel research literature on the distributional consequences of economic freedom is full of conflicting findings. In this paper, we take a step toward reconciling these two bodies of literature by exploring the within‐quintile growth consequences of changes in three separate elements of economic freedom: the size of government, institutional quality and and policy quality. Although the distributional consequences of increases in economic freedom are theoretically ambiguous, we find evidence that economic freedom affects all parts of the income distribution equally, in addition to indications that the growth effects are largest for the poorest and richest quintiles.

This essay examines the common empirical connection between trust in people in general (social trust) and trust in the courts and the police (so-called legal trust). In much of the world there is a strong correlation between social trust and legal trust, which is sometimes interpreted as a causal connection from legal trust to social trust. But in many African countries, the correlation breaks down. We hypothesize that this is because many citizens of African countries do not see legal officials as representative of the general public, as illustrated by variation in legal trust with the form of colonialism some African countries endured, French Colonialism in particular. This result suggests that social and legal trust are connected only when legal officials are seen as representative of most members of society. Our interpretation suggests that legal trust is a function of social trust, but not necessarily the other way around.

The exact impact of lockdowns and other NPIs on Sars-CoV-2 transmission remain a matter of debate as early models assumed 100% susceptible homogenously transmitting populations, an assumption known to overestimate counterfactual transmission, and since most real epidemiological data are subject to massive confounding variables. Here, we analyse the unique case-controlled epidemiological dataset arising from the selective lockdown of parts of Northern Denmark, but not others, as a consequence of the spread of mink-related mutations in November 2020. Our analysis shows that while infection levels decreased, they did so before lockdown was effective, and infection numbers also decreased in neighbour municipalities without mandates. Direct spill-over to neighbour municipalities or the simultaneous mass testing do not explain this. Instead, control of infection pockets possibly together with voluntary social behaviour was apparently effective before the mandate, explaining why the infection decline occurred before and in both the mandated and non-mandated areas. The data suggest that efficient infection surveillance and voluntary compliance make full lockdowns unnecessary at least in some circumstances.

The association between social trust and long-run economic growth is well-documented. However, which determinants of growth are affected by social trust remains an open question. This paper therefore explores to which extent social trust affects the rate of factor accumulation versus productivity improvements. Previous studies indicate that social trust could affect both the accumulation of physical and human capital and the rate of productivity increases. Existing literature also indicates that part of the growth effects may be due to how trust affects the quality of formal institutions. The effects of trust are estimated in a panel of 64 countries observed in five-year periods between 1977 and 2017, using growth accounting to separate patterns of growth. The results unequivocally show that social trust predominantly affects long-run growth by affecting the growth of productivity and that only a small share of that effect runs through the effects of trust on formal institutions.

Media freedom is often curtailed in the wake of terrorist attacks. In this contribution, we ask whether constitutional provisions that are intended—directly or indirectly—to protect media freedom affect the degree to which press freedom is curtailed after terrorist incidents. We find that neither provisions explicitly protecting media freedom nor provisions that might protect media freedom indirectly (such as those guaranteeing the independence of the judiciary) mitigate the post-terror curtailment of press freedom.

Empirical studies have shown democracies to be more supportive of pro-market institutions than authoritarian regimes; however, to date, it is virtually unknown through which channel democracy might actually create institutional improvements. In addition, causality between democracy and economic institutions is anything but clear, as competing hypotheses highlight. In this article, we examine the possible association of democratisation and political instability with sound monetary policy and the independence of central banks, both of which can be considered central pillars of an economic policy aimed at producing overall prosperity. Results mainly indicate that stable transitions to democracy are followed by strongly improved access to sound money and more independent central banks, probably because stable shifts to electoral democracy create incentives for policymakers to refrain from using monetary policy for short-run gains. Conversely, we also find evidence that especially unstable democratic transitions could impede the establishment of a more independent central bank, making inflationary policies and high money growth more likely.

We ask whether, as many seem to think, corruption worsens, and judicial accountability improves, inequality, and investigate this empirically using data from 145 countries 1960–2014. We relate perceived corruption and de facto judicial accountability to gross-income inequality and consumption inequality. The study shows that corruption is negatively, and that judicial accountability is positively, related to both types of inequality. The estimates are particularly pronounced in democracies and arguably causal in the case of consumption inequality, which we show using a novel identification method indicating that the full effect only occurs after institutional stability has been established. The findings suggest that “unfair procedures” – corruption and deviations from judicial accountability – may benefit the economically worst off and worsen the situation of the economic elite.

Most politicians and international organisations advocate for increased regulation and government control of industry in order to handle climate change and reduce overall CO2 and greenhouse gas emissions. However, it remains an open question how economic freedom is associated with environmental damage and whether deregulation is harmful to the environment or incentivises the use of green technology. On one hand, more government control and regulation may force firms and individuals to reduce their emissions. On the other hand, more economic freedom is likely to enable innovation and the adoption of green technological development. In this paper, I therefore combine data on growth in CO2 emissions and GDP per capita with the Fraser Institute’s Economic Freedom of the World indices in order to test if economic freedom affects emissions. I do so in the context of estimating a standard Environmental Kuznets Curve in which economic freedom can both reduce overall levels as well as shift the shape of the curve. The results suggest that economic freedom reduces overall CO2 and greenhouse gas emissions but also shifts the top point of the Kuznets Curve to the left. Part of this effect may be due to the effect of economic freedom on the adoption of renewable energy.

The COVID-19 pandemic has not only caused hundreds of thousands to die and millions to lose their jobs, it has also prompted more governments to simultaneously declare a state of emergency than ever before. States of emergency usually imply the extension of executive powers that diminishes the powers of other branches of government, as well as to the civil liberties of individuals. Here, we analyze whether the use of emergency provisions during the COVID-19 pandemic is an exception, and find that this is not the case. In fact, some measures point at long-term dangers to the rule of law and democracy. We also explicitly control for the use of executive decrees and find that many executives perceive of executive decrees as a substitute for states of emergency.