Globalization And Outcomes Of Institutional Competition

Institutional competition, or competition of countries for mobile individuals and organizations by changing the system of formal institutions and adopting it to the demands of mobile groups and individuals, is considered to be an important element of globalization. A popular view is that institutional competition improves the quality of institutions, because it acts as discovery process and additional control mechanism for the government. The outcome of institutional competition is always better institutions. Hidden assumptions underlying this thesis are first, that the individuals and organizations prefer transaction-cost-efficient institutions and second, that the government is interested in attracting mobile individuals and organizations.