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According to the common sense, experts, backed up by scientific methods, describe the “possible states of the world” in a value-neutral way. Then, in the political arena, delegates build on these proposals, but also consider values and interests. The present paper attempts to revise such an understanding of local economic development (LED) and argues that many of the deficiencies deriving from such a view can be remedied by deliberative participation, which is not merely a theoretical necessity, but also a practical possibility.With regard to the issue of public participation and deliberation, the paper identifies two main approaches in the LED literature: the “political” and the “apolitical”, of which the latter is mainly characterised by economic theorising. We take a closer look at the “apolitical” approach and demonstrate that in fact it is very much political. Therefore, we call for the transgression of the borderline between politics and expertise in LED, and suggest a joint democratisation of these interrelated terrains. We argue that deliberative participation is able to contribute to the quality of both the expert proposals and the working of the politics.

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Scientometrics
Authors: Mauricio Uriona-Maldonado, Raimundo N. M. dos Santos and Gregorio Varvakis

Abstract

Over the last decades there has been a growing interest on developing research and formulating public policy by using the Innovation Systems approach. However, as evidenced on the academic literature there is a lack of systematic, chronological and synthesizing studies indicating how this field has evolved over time. This paper has as main objective to consolidate the state of the art of academic research on IS, based on a bibliometrics study on literature published over the past 35 years. The results are discussed under the following perspectives: general results, chronological distribution, author relevance, articles and cited references of relevance, journals relevance and institutions and countries relevance. The paper ends with a discussion of the main implications and limitations of the study.

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The study aims to briefly review the main directions and latest trends of new institutional economic theory (NIE) that puts institutions in the focus of its research as an alternative to neoclassical economics. We present the applied definitions of institutions, highlight the main steps in the evolution of the institutional perspective and review its three main directions (property rights, transaction costs and contracts). Institutional economic works from the empirical field that prove significant connections between institutional variables and economic performance are also presented. We highlight new directions elaborated in the latest research. As a conclusion we summarize the main characteristics of NIE in order to call attention to the usefulness and value of this economic theory.

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Acta Oeconomica
Authors: Tural Makhmudov, Maria Konovalova, Olga Kuzmina and Natalia Persteneva

This article aims to explore the relationship of the shadow economy with the institutional environment and develop practical recommendations for government policies around the world, and particularly in Russia. The urgency of the issue under research is caused by the existing need to study the shadow economy in order to find ways to reduce its scale and level out its negative externalities. Despite the fact that most of the papers focus on tax burden as a fundamental determinant of the shadow economy, the authors of this article believe that institutional tools can expand the boundaries of research on the content of the shadow economy as an economic category. Statistical analysis of 105 countries with different development levels revealed a stronger correlation between the quality of institutions and the size of the shadow economy than the one between total tax burden and the size of the shadow economy. The findings of this article can be useful in developing state strategies for combating the shadow economy and carrying out economic policies of the state as a whole.

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The soft budget constraint

An introductory study to volume IV of the Life’s Work series

Acta Oeconomica
Author: János Kornai

The author’s ideas on the soft budget constraint (SBC) were first expressed in 1976. Much progress has been made in understanding the problem over the ensuing four decades. The study takes issue with those who confine the concept to the process of bailing out loss-making socialist firms. It shows how the syndrome can appear in various organizations and forms in many spheres of the economy and points to the various means available for financial rescue. Single bailouts do not as such generate the SBC syndrome. It develops where the SBC becomes built into expectations. Special heed is paid to features generated by the syndrome in rescuer and rescuee organizations. The study reports on the spread of the syndrome in various periods of the socialist and the capitalist system, in various sectors. The author expresses his views on normative questions and on therapies against the harmful effects. He deals first with actual practice, then places the theory of the SBC in the sphere of ideas and models, showing how it relates to other theoretical trends, including institutional and behavioural economics and theories of moral hazard and inconsistency in time. He shows how far the intellectual apparatus of the SBC has spread in theoretical literature and where it has reached in the process of “canonization” by the economics profession. Finally, he reviews the main research tasks ahead.

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There is a considerable discrepancy between official rhetoric and reality in the Hungarian higher education system. Based on a series of personal interviews conducted with the actors of Hungarian higher education, this article offers an analysis of the positions and strategies of the key players. Using the Matrix of Alliances and Conflicts: Tactics, Objectives and Recommendations (MACTOR) method, the actors of the higher education system are analysed in terms of direct and indirect reciprocal influences, and their positions with regard to a generic set of possible objectives. It is argued that there is an urgent need for concentrating resources and for re-defining the higher education strategy based on the long-term demands of a globalising world.

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Anti-Equilibrium (1971) was well ahead of its time in emphasising that (i) economics should draw from biology, rather than physics, as its methodological underpinning; (ii) evolutionary logic requires a different type of decision-making in simple, routine matters, as opposed to large and important decisions; (iii) the most important production processes are non-linear, with increasing returns to scale being the rule, rather than the exception in modern capitalist economies and — in conclusion — that there is no such thing as general equilibrium. In modern societies, goods and services are either in shortage (Socialism) or in a state of oversupply (Capitalism). It is either a buyers’ market or sellers’ market.

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Hayek’s theory of socio-cultural evolution is a generalization of his theory on spontaneous market order. Hayek explains both the emergence of market and social institutions serving as a social basis for that order within the framework of a unified evolutionary logic. This logic interprets the emergence and survival of spontaneous order and group-level rules of conduct as an unintended consequence of human action. In order to explain the emergence of social norms exclusively on the basis of methodological individualism, one would have to give up an exclusively evolutionary explanation of these norms. Since Hayek applies the invisible-hand explanation to the investigation of social norms, he combines the position of methodological individualism with functionalist-evolutionary arguments in his analysis. Hayek’s theory of socio-cultural evolution represents a theory in the framework of which methodological individualism and functionalism do not crowd out but complement each other.

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This essay attempts to understand János Kornai’s works from a political economy perspective. It argues that Kornai has significantly contributed to the formation of a new paradigm of political economy. The main endeavor of Kornai has been the combination of analytical concepts of economics with the empirical description of real economies. After a certain period of theoretical experimentation János Kornai formulated his research program that can be called the shortage economy explanation of the socialist system. The Economics of Shortage and The Socialist System have created a new theoretical paradigm in a framework in which it has become possible to establish a connection between the analytical and empirical, universal and historical aspects of the theory studying the socialist system as a real economic entity. János Kornai has built his analysis of the socialist system on the primary role of politics in the creation of economic institutions. In his present work on capitalism he has extended this thesis to the capitalist system. This seems to be an important contribution of his to a new political economy paradigm that is just in the process of formation.

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Abstract

This paper investigates the role of extra-regional capabilities in regional economic development in a Central and Eastern European context. This is done by analysing the association between the related variety of manufacturing import and export of domestic- and foreign-owned firms on the one hand, and regional employment in manufacturing export on the other. By means of a panel regression framework applied to the Hungarian microregions between 2000 and 2011, we find that domestic firms, in particular, benefit from the related variety of export activities in the regions, while import related to existing export activities is beneficial amongst both foreign and domestic firms. Furthermore, bridging the technological gap between foreign companies and the host economy requires stronger technological relatedness, unless domestic firms have experience in importing.

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