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ABSTRACTS

InstitutionalVoidsduringStateRescaling

LoraineKennedy
(Centred'tudesdel'Indeetdel'AsieduSud(CEIAS),France)

InstitutionalvoidsandstatespatialrescalinginIndia

TakWingNgo
UniversityofMacau/ErasmusUniversityRotterdam/IIAS

InstitutionalVoidsandScalarPoliticsinChinasPearlRiverDeltaRegion

Theincreasingimportanceofsubnationalterritorialunitshasbeenunderlinedbymany
studies as the source of growth, competition, and political contention in a changing
globalorder.InthecaseofChina,localgovernmentshavebecomeactivelyengagedin
turning their regions into placespecific coordinates of global production/investment
complexes. Concretely, a wide range of stateorganized programs such as enterprise
zones, science parks, venture capital projects, convention centers, labor training
schemes,urbanredevelopmentprojects,technopoles,ecocities,andsoonhavebeen
implementedforthepurpose.Theseprogramsareusuallygovernedbyspecialrulesand
regulations not applicable nationally. Their intention is to map out a specialized
territorialspacewithadistinctiveregulatoryregimethatsetstheregionapartfromthe
restofthenationaleconomy.

During this process, two parallel and seemingly contradictory developments


emerged.Onetheonehand,severecompetitionbetweenlocalitieshasresultedinlocal
protectionism,regionalisomorphism,andablindrushtoestablishspecialdevelopment
zones.Ontheotherhand,localstatesinsomeregionshavesoughttocollaboratewith
neighbouringstatesinworkingoutaregionaldivisionoflabourthatisbeneficialtoall
parties.Thisismostobviousinthecaseofthepanregionalcooperationframeworkin
thePearlRiverDeltaregion.

These two contradictory trends underline the essence of scalar politics in China.
Theprocessisnotmerelyshapedbyeconomicconsiderations,governmentpolicies,or
centrallocalrelations.Ratheritisfashionedbycontentionsbetweenmultiplelayersof
authoritiesintheirefforttoscaleupanddown.Theproblemofinstitutionalvoidarises
whentheinstitutionalarrangementsneededtoarbitratescalarpoliticsareabsent.The
national state has very limited capacity in regulating or coordinating subnational
contentionandcooperation,whileinstitutionsofmesolevelgovernancearecompletely

absent.Thispaperexplorestheconditionswhichpreventorfacilitatethefillingofsuch
voids,anddiscussestheimplicationsintherescalingofthestateinChina.

HubertSchmitz
InstituteofDevelopmentStudies,UnitedKingdom*

DauAnhTuan
VietnamChamberofCommerceandIndustry,Vietnam**

PhamThiThuHang
VietnamChamberofCommerceandIndustry,Vietnam***

NeilMcCulloch
AustralianAidProgramme,Indonesia****

DriversofEconomicReforminVietnam sProvinces

AllowingprovincestofindtheirownwayforwardwascentraltoVietnamsprogressin
institutionalandeconomicdevelopment.Thispaperexamineswhodrivestheeconomic
reform process in the provinces, exploring the role of business, government and the
Party. The research shows that in those provinces which are making most progress in
economicreform,theprivatesectorplayedanimportantrole;notagainstgovernment,
butwithgovernment.Therewasnoformalpublicprivatecoalitionbutthedynamicwas
oneofproactivegovernmentseekingtheinputfromtheprivatesector,andthelatter
lobbying for and contributing to responsive and effective government. Both national
and foreign enterprises played a role but small enterprises tended to be marginalised
from the process. Some of the best insights come from comparing provinces and
observinghowdifferentalignmentsofinterestinfluencedthereformprocess.

Keywords:investmentclimate;economicreform;economicgovernance;privatesector;
statebusinessrelations;decentralisation;provincialgovernment;Vietnam

Electroniccopyofthepaperisavailableat:http://ssrn.com/abstract=2196392

* Hubert Schmitz is Professor at the Institute of Development Studies (IDS), Brighton


BN19RE,UnitedKingdom(h.schmitz@ids.ac.uk).Heisthecoordinatoroftheprojecton
whichthisresearchisbased.
** Dau Anh Tuan is Deputy Director of the Legal Department of Vietnam Chamber of
Commerce and Industry (VCCI), Ha Noi. He has coordinated Vietnams Provincial
CompetitivenessSurveysinceitsinceptionin2005.
***PhamThiThuHangisSecretaryGeneraloftheVietnamChamberofCommerceand
Industry(VCCI).AsDirectoroftheEnterpriseDevelopmentFoundationsheisincharge
ofVCCIresearch.

**** NeilMcCullochisLeadEconomistoftheAustralianAidProgrammeinIndonesia.He
wasformerlyaFellowofIDSandLeaderofitsGlobalisationTeam.

AnkMichels
SchoolofGovernance,UtrechtUniversity,theNetherlands

CorvanMontfort
TilburgSchoolforPoliticsandPolicy,TilburgUniversity,theNetherlands

Thegovernanceofpublicprivatepartnerships:institutionalvoidsinIndiaandChina

Toaddressissuesofsustainableurbandevelopment,collaborativearrangementsamong
governments,privatesectorcompanies,and(organizationsof)citizensareincreasingly
applied. Against the background of changing relations among state, market, and civil
society,thispaperaimstopicturemajortrendsinpartnershipsinurbangovernancein
India and China. The paper distinguishes two types of public private partnerships :
partnerships between government and private sector, and partnerships between
government and civil society organizations. In both countries, partnerships between
government and private sector companies are mainly applied in investments in
infrastructure whose main goal is to further support economic growth. Partnerships
betweengovernmentandcivilsocietyhavebeendevelopingbothinpolicymakingand
in service delivery in areas such as city management, waste management, and water
projects in India, and public services and social welfare in China. The paper further
arguesthatproductiveandlegitimatepartnershipswillonlysustainiftheymeetcriteria
of good governance, including effectiveness, efficiency, accountability, and
responsiveness. The findings show that institutions for good governance need to be
further developed. The main institutional voids relate to 1) the role of government,
moreinparticularthefightagainstcorruption,illiteracy,andpoverty;2)theruleoflaw,
includingissuesofaccountability,transparency,andcitizenrights,and3)regulationof
processes of accountability and oversight on public private partnerships, and of the
involvementofcitizeninvolvement.

AshimaSood
IndianSchoolofBusiness,India

CitiesasClubs:ThePromisesandPitfallsofCorporateUrbanisminContemporaryIndia

Purportedlyofferingworldclassresidentialamenitiestomiddleclassresidents,high
endandexclusiveprivatecommunitiesareoneofthemostvisibleandadvertised
forms of urban growth in Indian cities. Given the wide variety of scales and
institutionalframeworkswithinwhichsuchdevelopmentisoccurringfromapartment
complexes to gated communities and enclaves to integrated townships and even

private cities few comprehensive mappings of its size and scope exist. Tracing its
shapeandimpact,however,iscriticaltounderstandinghowtheneoliberalrestructuring
ofurbaninstitutionsinIndiaisunfolding.

Far from being an extrastatal phenomenon, such corporate urbanization has


occurred with active governmental encouragement and even partnership, in a
policyscape where increasingly evident gaps in public funding of basic services are
soughttobefilledthroughprivatecapitalflows.Anumberofstudieshaveexaminedthe
rhetoric, politics and changes in local governance frameworks that have facilitated
private investment into urban infrastructure in locations such as Gurgaon, Haryana,
Navi Mumbai and Cyberabad near Hyderabad, among others. However, less is known
about the local patterns produced by these processes that rework the city as a club
realm,withprovisionofkeyurbanpublicamenitieswhetherwater,power,securityor
evenplanningrestrictedtoaselectpayingmembershipwithinboundedcommunities.

AdvancedbytheBritishplannerChrisWebsterthroughthenotionofproprietary
urban communities, this understanding of club goods in urban contexts has proved
influential in the study of gated communities worldwide. In the Indian case, recent
studies, such as those compiled in the edited volume Governing Indias Metropolises
(Routledge2009)havealsopointedtothegrowingtranslationofpublicgoodsintoclub
formsasacentralfeatureofbasicservicesprovisionespeciallywaterandsanitation
incontemporaryurbanIndia.

Takingseriouslyclaimsofexclusivityinmarketingandpromotionalmaterialsfor
theseresidentialdevelopments,aswellasthepresenceofboundarydefiningwallsand
gatedentry,Iarguenonethelessthatsuchdifferentialprovisionofpublicamenities
within gated compounds the cantonment, or even the campus is not new in
colonial and even precolonial contexts in India. Yet the unprecedented growth of the
club city paradigm reveals a range of efficiency and equity implications that have
hitherto gone unrecognised in the international literature on gated communities as
urbanclubs,andeveninthepubliceconomicsliterature.

Statelevel integrated township policies, national policies on SEZs and citylevel


changes in urban governance modalities highlight the range of public goods that are
increasingly up for clubprovisioning in this new landscape, including law and order,
i.e. security. Not only does this lead to fragmented and uneven provisioning of these
publicgoods,italsocreatesfertilegroundfortheparadoxicalproductionofinformality
inurbanspace,markedbyeverhigherlevelsofcongestion,outsidethesupplynetworks
fortheseclubamenities.Attemptingtomaintainhighserviceslevelsthroughrestrictive
access may alleviate congestion issues for some public goods such as parks and
recreation,butexacerbateexternalitiesforotherslikegroundwater.

MichaelCarney
JohnMolsonSchoolofBusiness,ConcordiaUniversity,Canada

MarleenDieleman
NationalUniversityofSingapore,NUSBusinessSchool,Singapore

MarkusTaussig
NationalUniversityofSingapore,NUSBusinessSchool,Singapore

Have Institutional Capabilities, Will Travel: Emerging Market Multinationals as


InstitutionalEntrepreneurs

Basedonalongitudinalcasestudyofamultinationalpropertydevelopmentfirmfrom
Indonesia,weaddtothenascentliteratureontheinstitutionalcapabilitiesofemerging
market multinational enterprises (EMNEs) by identifying three key internationally
transferabletypesandillustratinghowafirmcantransferthemacrosscountryborders.
WedemonstratethatanEMNEexpertatshapingitshomeinstitutionsinitsfavourmay
also reap benefits as an institutional entrepreneur in foreign host countries. We then
discuss whether such cross border use of institutional capabilities constitutes an
international form of institutional entrepreneurship and how resulting institutional
changesarenotnecessarilybebroadlybeneficialforforeignhostcountries.

Keywords: Emerging markets, Institutional capabilities, Institutional change,


Institutionalentrepreneurship,Multinationalenterprises

SamWong
UniversityofLiverpool,UnitedKingdom

Shifting from Decentralisation to Recentralisation Deepening Institutional Voids in


NaturalResourceManagementinDevelopingCountries?

Monopolisingtheownershipofnaturalresourcesbycentralgovernmentsindeveloping
countriesinthe1960sand1970shasspelledadisasterforecologicalsustainability.In
responsetolanddegradation,watercontaminationandlossofbiodiversity,theWorld
BankandUnitedNationsDevelopmentProgramshavepromoteddecentralisationsince
the 1980s in an attempt to empower local communities to monitor illegal logging, to
protectendangeredspeciesandtousewatersustainably.

The effectiveness of decentralisation has, however, been under challenge since


ecological and social sustainability have deteriorated, rather than improved, in many
forests and river basins. Decentralisation, without strengthening local governance, is
criticised for leading to elite capture and localised corruption. In the light of this, the
urgetorecentralisenaturalresourceshasbeengainingmomentumintheearly2000s.


Theoretically,EatonandDickovick(2004)proposetoreassertcentralcontroland
reduce subnational control over fiscal resources (p94). In practice, the central
government in Nepal, for example, has recently amended the Forest Act originally
writtenin1993andsomepowers,giventocommunities,havebeenreturnedtocentral
government.

Witnessingtheswingingpendulumfromdecentralisationtorecentralisation,this
paper examines whether, and how, recentralisation helps improve resource
governance. Drawing on literature of commonpool resource management in
developing countries, it argues that recentralisation redraws power relationships
betweencentral,regionalandlocalgovernments.Italsoengageslocalcommunitiesto
renegotiatetheirrolesinmanagingrevenuesgeneratedfromlocalresources.

Examples show that recentralisation, without proper consultation, resumes


power struggles between different levels of governments. Previous decentralising
programmespromotinglocalisedelectionsalsocauselegalconfusionoverwhohasthe
legitimacy and authority in commanding natural resources. The legal challenge risks
deepeningexistinginstitutionalvoids.

Additionally, decentralising practices have already raised local expectations and


enthusiasm.Thesuddenlossofpowerresultsinfrustrationanddisillusionmentamong
local communities. This could have unintended undesirable consequences for local
sustainabilityinitiatives.

This paper suggests that the desirability and effectiveness of recentralisation


require more critical analyses into the historically and politicallynegotiated nature of
arrangements for resource governance. It also urges a closer examination of the
changing distribution of costs and benefits in the process of power transfer among
differentstakeholders.

LaurensBakker
UniversityofAmsterdam/RadboudUniversityNijmegen,theNetherlands

InvestmentconflictsinIndonesia:centerregioncompetitionasafinancialandpolitical
arena

TheprovinceofEastKalimantanisIndonesiasrichestprovincewhenitcomestonatural
resources. Until recently, most of the revenue accumulated in its industries did,
however, not reach the provinces treasury as Indonesian tax law stipulates that such
profits are pooled by the national administration and redivided across all the nations
provinces. Such strict central control over regional revenue was regularly avoided by
splittinguplargerenterprisesandregisteringthemassmallcompaniesfallingwithinthe
limits of local investment, a practice of which the legislator is presently determining
whetheritshouldbeconsideredcorruption.

Recently, East Kalimantan succeeded in negotiating a readjustment of the


percentage of its revenues not subject to central government redivision, while
simultaneously increasing its efforts to attract (foreign) investors, resulting in serious

competition between the respective levels of government over the administrative


control over the provinces resources. Strictly speaking, the allocation of foreign
investmentsisthetaskofthenationlevelInvestmentCoordinatingBoard(BKPM),but
inEastKalimantanaprovincialleveldaughteroftheboardismorecloselyaffiliatedto
thatlevelofgovernment. Bothlevels oftheInvestmentBoardnegotiateandfacilitate
investment deals in the province, the main difference being that the national Board
workstopdownandkeepsatightcentralcontrolondealswithinvestors,whereasthe
provincial board arranges deals directly between investors and local government and
worksfromthelocalperspectiveandinterest.

The result is a competition over government authority, resources and economic


revenues that is substantiated through legal arrangements, shortcomings in national
legislation, business networks and a (lack of ) knowledge regarding the investment
sites.Institutionalvoidscometotheforeintheuncertaintiescreatedbyoverlapsinthe
law,thelackofspecialistknowledgeinthecentralgovernment,andtheexpertuseof
local contacts and information in the province. State rescaling through the
implementation of the Investment Coordinating Board is effectively hindered on the
provinciallevel,astheaimsofthatlevelincreasedcontroloverresourceindustriesand
revenues is diametrically opposed to the goal of the central state, which aims at
central coordination. Such coordination of investments is however considered at the
provincial level to be an attempt at recentralizing control over resources and the
economy.

InthispaperIconsidertheinstitutionalvoidsdeployedtocontinuethissituation
againstthebackgroundofthefinancialandpoliticalcompetitionthatsubstantiatetheir
existence.Myaimistocometoanoverviewofinstitutionalshortcomingsasmuchasto
provide an analysis of the interests, discourses and power relations that ensure their
continuation.

SuzanaB.Rodrigues
RotterdamSchoolofManagement,ErasmusUniversity,theNetherlands

Institutionalvoidsinemergingmarketsandthedilemmasofgrowth

During the past decade, emerging markets have exhibited extraordinarily high growth
ratesincomparisonwithdevelopedcountries.Manyagreethatwhatisdistinctiveabout
emerging markets is their rhythm of growth. Over the past thirty years, emerging
marketshavebeenencouragedtoshapetheirinstitutionstofosterthedevelopmentof
business, both domestic and international, under the assumption that the efficient
functioning of markets is core to economic growth. Though emerging markets have
achievedfastgrowthratesinthepast,andareexpectedtodosoinyearstocome,there
isevidencethattheystilllagbehinddevelopedcountriesinseveralkeyareas,suchas
human development, institutional competence, transparency levels and other social
features.Iarguethatamainreasonforthisdisappointingperformanceisinstitutional
weakness.


The view that markets provide superior mechanisms to incentivise economic
activityhasdominatedacademicperspectivesoneconomicgrowth.Amajorchallenge
foraperspectivewhosegoalsarecentredprimarilyoneconomicgrowthisthatittends
toignorethepotentialbenefitsofinstitutionsinshapingotherfeaturesofsocietywhich
arecoretoamorecomprehensiveviewofgrowth,i.e.onethattakesintoaccountits
sustainability.

Inthispaper,Iwillreflectontheincessantfightforgrowthinemergingmarkets
and explore the undesirable consequences of rapid economic development, one of
them being the exacerbation of institutional voids. Institutional voids are commonly
defined as gaps between rules and their purpose and the effectiveness of their
implementation. Though institutional voids can be positive to business in many
respects, one of these being the creation of spaces for new business and
entrepreneurship, it is also important to consider that voids emerge when economic
growth advances faster than social and institutional structures. Hence, voids can also
generate unwanted consequences for society, such as the overexploitation of human
and natural resources. In this paper I will consider two types of void: structural and
contingent. While the former concerns the distance between rules as they are in the
bookandtheinstitutionalcapacityfortheirenforcement,contingentvoidsarisefroma
combinationoffactorsuniquetogivenenvironmentssuchasthesocialandeconomic
contextsinwhichtheyareembedded,i.e.pressuresforgrowth.

I will discuss some examples of structural and contingent voids mainly in the
Braziliancontextandproposeamodeltoanalysehowtheyemerge,inordertoindicate
how institutions can address the issue of voids. I suggest that emerging markets can
onlymaketheleapforwardtoastageofsustainablegrowthifattentionisfocusedon
institutionbuildingandeffectiveness,throughadesignthatconsidersintraandinter
institutionalcoordinationtogetherwithstrategiesaimedatachievingembeddednessin
bothpracticeandbehaviour.