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ABSTRACT
Studies have identified two fundamentally different types of informal institutions: public and private informal institutions. Empirically, most studies have focused on public informal institutions such as social trust, since indexes measuring private informal institutions such as closed trust have been rare. This research introduces a new index of private informal institutions that captures whether private informal institutions hinder or enhance development by complementing, accommodating, competing, or substituting formal institutions. To this end, we introduce an empirical strategy to measure the four types of private informal institutions for more than 120 countries for the years 1990–2010 in a five-year interval. The extracted index reveals that advanced industrial democracies have complementing and accommodating private informal institutions, whereas post-communist and resource-rich countries have substituting private informal institutions, and countries with some experience of democratization and development display competing private informal institutions. The index also shows that private informal institutions can change rapidly, which can expedite and enhance institutional quality for some countries but deteriorate it for others.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 Although China is theoretically also included in this group (Rothstein Citation2015), our measure does not include China due to lack of available data.
2 Although we could have applied median value to obtain four types of private informal institutions, we used the average value because we assessed that the outlier data did not significantly skew the average value. For instance, if mean value is greater than median value, this implies there is a significant effect from the outliers and thus the likelihood that the data is skewed. However, when comparing the mean and median values for both the negative and positive residuals in 2010, mean value was not greater than median value. For the positive residuals in 2010, the mean and the median values were 0.24 and 0.31, respectively. For the negative residuals in 2010, the mean and the median values were −0.24 and −0.19, respectively. Theoretically, we also assessed that using the average value was appropriate, since this research is interested in capturing specific characteristics of private informal institutions – whether it is strong enough to substitute or complement public informal institution. Given this goal, calculating the average value seemed like the logical choice.
3 This refers to how explicitly the constitution specifies independence of judicial courts.
4 For more information, please visit: http://www.indsocdev.org/.
5 OECD members in Figure 3 (32 members): Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United States. EU members in Figure 8 not counted as an OECD member states (5 members): Bulgaria, Croatia, Cyprus, Malta, Romania.
7 Public rules defined as formal institution and public informal institution.
8 Private informal institution.
Additional information
Notes on contributors
Kee Hoon Chung
Kee Hoon Chung is an Assistant Professor in the Department of Public Administration at the University of Ulsan. His research focuses on human resource management, organizational behavior and comparative institutions. His research has been published at Public Management Review, International Review of Administrative Science, Public Choice, the Economics of Transition, and the Journal of Comparative Policy Analysis.