Explaining Asian growth paradox through interaction between informal and formal institutions
Asian Education and Development Studies
ISSN: 2046-3162
Article publication date: 10 March 2021
Issue publication date: 9 September 2021
Abstract
Purpose
Much of existing research has attempted to explain Asian Growth Paradox through formal institution – role of the government or rule of law. Therefore, this paper attempts to empirically explain the paradox with informal institution including interaction between informal and formal institutions. Two interrelated research questions summarize this research. First, how can we capture the relationship between informal and formal institutions? Then, how is that relationship different for Asian Paradox states vs non-paradox states?
Design/methodology/approach
To capture the relationship between informal and formal institutions, we use Helmke and Levitsky (2004)'s framework to categorize the interaction as complementing, competing, substituting and accommodating. We perform cross-sectional regression analysis for more than 130 countries.
Findings
We find that the developed, developing and the Asian Paradox states display different patterns of interaction between informal and formal institutions. However, we also find that the interaction effect has a limited value explaining growth for most of these countries, suggesting that Helmke and Levitsky (2004)'s framework has limitations. Finally, we challenge the notion of Asian Paradox states, as countries outside of Asia also qualify as the Paradox states.
Originality/value
Not much empirical effort has examined how different relationships between informal and formal institutions can explain growth internationally across countries. We show that different institutional patterns explain growth across the Paradox states and non-Paradox states.
Keywords
Acknowledgements
Funding: This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2018S1A3A2075609).
Citation
Chung, K.H. and Kim, D. (2021), "Explaining Asian growth paradox through interaction between informal and formal institutions", Asian Education and Development Studies, Vol. 10 No. 4, pp. 600-614. https://doi.org/10.1108/AEDS-10-2020-0235
Publisher
:Emerald Publishing Limited
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