Comparative View of the Quality of National Institutional Environments

1. 5th Black Sea SymposiumThe Black Sea region as an influential crossroad between East and West:A path towards extroversion” The quality of national institutional environment in NC and Black Sea countries: Burden or opportunity for regional development and innovation? Nikolaos Hlepas, Assoc. Professor, Dept. of Political Science & Public Administration, National and Kapodistrian University of Athens nhlepas@gmail.com Athens, 2 July 2012

2. Comparative View of the Quality of National Institutional Environments Background The Research (based on SEARCH program WP5.3) focuses on features of institutions at the national level (due to the lack of data at the regional level). The quality of institutions relies mainly on qualitative assessment and is not easy to measure (Kaufmann et al. 2008). World Economic Forum provides a solid base of common indicators and empirical data based on a sample of qualified professionals of the business sector reflecting their perceptions as actors in different institutional environment. The aforementioned indicators are particularly useful because they are common for all countries in a period from 2004-2011, covering key features of institutional performance. Main aspects of institutional performance that will be examined are: a. Government Effectiveness , b. Regulatory Quality, c. Rule of Law d. Control of Corruption (Jurlin K./ Cuckovic, N.: 2009) The aim of this research exercise is to highlight trends of institutional performance across time for selected countries which are grouped in clusters according to the pace of Europeanization: EU countries (e.g. Greece, Romania, Bulgaria), candidate countries (e.g. Turkey, Croatia) .Furthermore, trends will be examined according to different geographical cooperation countries (e.g. Black Sea countries, Southern Mediterranean NC, Eastern NC). Furthermore, convergencies or divergencies among countries of the same group will be examined in the period (2004-2011) using the coefficient of variation.

3. Comparative View of the Quality of National Institutional Environments Assumptions • Different national institutional frameworks influence the Europeanization process ( e.g. Heritier, Guallini, Bach, Paraskevopoulos/Getimis/ Riss et. al.) .Divergent processes of Europeanization in different countries and macro-regions reflect “Goodness of Fit” or “Miss-Fit”, along line different responses of domestic legal and regulatory structures to the “European Community aquis”. • The main thesis is that “path-dependency” influences the changes and transformations of the legal and administrative structures, which are promoted by the European programmes and the co-operation agreements in Macro-Regions (e.g. Black Sea Conventions and multi-lateral agreements). Thus, different trajectories of change emerge, with different paces and velocities, while traditional structures and practices co-exist with innovative modernization efforts. In any case, most of the evaluation reports highlight that even in cases of legal compliance, implementation of policies is lagging behind.

4. Comparative View of the Quality of National Institutional Environments Hypotheses • EU member states (e.g. Gr., Bu., Ro.), through the Europeanization process, show better institutional performance than candidate countries (e.g. Turkey, Croatia). • Candidate countries move more close to a trajectory of “goodness of Fit” than other NC Black sea countries. • Every country has its “significant trajectory” of institutional performance. Other factors, than Europeanization, play also an important role. • Countries with a political and administrative culture closer to the “weberian” bureaucracy of middle Europe (e.g. Croatia) do better than countries with individual political culture, clientelism and personalized networks (e.g. Bulgaria, Greece). • In general, Europeanization Process and ENPI can promote improvement of national institutional environment and convergence of performance across countries. • Better performance of national institutional environments goes alongside with better scores in competitiveness of national economy.

5. Comparative View of the Quality of National Institutional Environments Main research questions • Which different trajectories concerning institutional performance emerge alongside single countries or clusters of countries (Europeanization, Regional Cooperation) • What kinds of differences by aspects of institutional performance between EU, EU Candidates, BSEC and ENP countries? Data sources • The main source is the World Economic Forum (The Global Competitiveness Report, Issues 2004-2011) Methodology • Analysis and evaluation of selected institutional indicators using aforementioned data source.

6. Comparative View of the Quality of National Institutional Environments Selected Indicators from WEF: 1. Government Effectiveness 1.1 Public trust of politicians 1.2 Favoritism in decisions of government officials 1.3 Wastefulness of government spending 1.4 Burden of government regulation 2. Regulatory Quality 2.1 Efficiency of legal framework 2.2. Transparency of government policy making 2.3. Strength of auditing and reporting standards 2.4. Efficacy of corporate boards 2.5. Protection of minority shareholders’ interests

7. Comparative View of the Quality of National Institutional Environments Selected Indicators from WEF: 3. Rule of Law 3.1 Property rights 3.2 Intellectual property protection 3.3 Judicial independence 3.4 Business costs of terrorism 3.5 Business costs of crime and violence 3.6 Organized crime 3.7 Reliability of police services 4. Control of Corruption 4.1 Diversion of public funds 4.2 Ethical behavior of firms

8. Comparative View of the Quality of National Institutional Environments Literature Background • Jurlin, K./ Cuckovic, N. (2009). Comparative Analysis of the Quality of Institutions in the European Countries, AssocizioneItaliana per lo Studio deiSistemiEconomiciComparati, XIIth Scientific Conference, Growth and Development Patterns: The Role of Institutions in a Comparative Perspective, University of Perugia, Perugia. • Kaufmann, D., Kraay, A., Mastruzzi, M. (2008). Governance matters: Aggregate and Individual Governance Indicators, 1996-2007. World Bank Policy Research Working Paper, No 4654, available at SSRN: http//ssrn.com/abstract=1148386. • Heritier, Adr. (2005) , Europeanization Research East and West: A Comparative Assessment, in: Schimmelfennig, Fr. , Sedelmeier, Ulr. (ed.), The Europeanization of Central and Eastern Europe, Ithaca, NY, Cornell University Press, 199-209. • Gualini, E. (guest ed.) (2006), European Planning Studies, Vol. 14, No. 7: ‘Governance Rescaling in Europe: Analytical and Empirical Explorations’ • Bache, I., Marshall, Ad. (2004), Europeanisation and Domestic Change: A Governance Approach to Institutional Adaptation in Britain. IES Queen's University of Belfast: Queen's Papers on Europeanisation. • Paraskevopoulos, Chr./ Getimis, P./ Rees, N. (2006): Adapting to EU Multi-Level Governance Regional and Environmental Policies in Cohesion and CEE Countries, Ashgate, Aldershot.

43. Comparative View of the Quality of National Institutional Environments Conclusions • In total, EU-15 shows better institutional performance than candidate countries, but this is not the case for BSCEC-EU members (Greece, Bulgaria, Romania), compared to some candidate countries (e.g. Montenegro). It is worth mentioning that institutional performance of Greece worsened a lot since 2005 • Candidate countries do not necessarily move more close to a trajectory of “goodness of Fit” than other NC Black sea countries. • It is true, that every country has its “significant trajectory” of institutional performance. Other factors, than Europeanization, play also an important role (s. the case of Greece).

44. Comparative View of the Quality of National Institutional Environments Conclusions (II) • Countries with a political and administrative culture closer to the “weberian” bureaucracy of middle Europe (e.g. Croatia) do not necessarily do better than countries with individual political culture, clientelism and personalized networks (e.g. Bulgaria, Greece, Turkey). • In general, it could not be indicated that Europeanization Process and ENPI can promote improvement of national institutional environment. Positive tendencies could be stated in Candidate, East ENC and (till 2008) BSEC countries. Developments in global economy and national contexts seem to be more influential • Convergence of performance across these selected groups of countries and within these groups could be stated. • Better performance of institutional environments does go alongside with better scores in competitiveness of economy.