Tuesday, January 8, 2013

Informal cultural mechanisms protect against private predation

From Constraining Predation: Formal and Informal Institutions by Ed Lopez. He quotes from the abstract -
Previous findings suggest that informal, cultural rules underlie constraints on government predation. Following this logic, this study asks how contract enforcement is achieved – through formal or informal mechanisms? After controlling for reverse causality, the empirical results suggest that informal cultural mechanisms protect against private predation and support contracting institutions while the formal institutions are insignificant.
This is interesting because it implies an even greater weight on cultural values and behaviors as the variables responsible for success (productivity). I read this report to be saying that there are better or worse government structures but unless the appropriate cultural values underpin those structures, you won't necessarily see the expected benefits from those structures. I don't disagree but it is interesting to see empirical evidence beginning to arise that would support that supposition.

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