The Importance of Ideas: Fighting HIV/AIDS in Malawi

By Hannah van der Ham

As Mark Blyth explains, ideas matter when analyzing institutional change. This theory can also help us explain how ideas can lead to inefficient policies. One example is a strategy adopted by the World Bank to fight HIV/AIDS in Malawi. Here, the World Bank applied the ABC strategy which promotes abstinence, being faithful and using condoms. However, the approach had no effect in Malawi as abstinence does not lead to necessary offspring, extramarital marriage is quite common among men and condom use is interpreted as a lack of confidence in your sexual partner.

The adoption of this inefficient policy can be analyzed by applying Blyth’s five hypotheses about ideas. As Blyth explains, “ideas (not institutions) reduce uncertainty.” In this case, there is uncertainty about what strategy would fight HIV/AIDS in Malawi most efficiently. However, the World Bank probably chose the ABC strategy after researching what had worked in other cases. This allowed them to design a policy based on an idea of what might work, rather than a random “shot in the dark”. Secondly, the World Bank’s idea was then shared by other international agencies, making them act collectively and invest money to implement their idea. Thirdly, the idea that the ABC method works was then used as a “weapon” that allowed the agencies to disregard existing informal institutions (e.g. extramarital relationships) rather than building their policies around them. Fourthly, the agencies then implemented policies based on their idea, making it “an institutional blueprint”. Lastly, unless the agencies recognize that the ABC strategy is inefficient, their idea will keep these policies in place.

This shows that the World Bank adopted inefficient polices because they based these on an idea that did not coincide with the reality. Thus, it is always important in development aid to consider the ideas of local agents in addition to policy makers’ ideas. Moreover, policies should be adapted to local circumstances, rather than adapting the local circumstances to the policy. This will only increase the policies’ efficiency.

Changing the Incentives: Female genital mutilation in Egypt

By Hannah van der Ham

Female genital mutilation (FGM) involves the “partial or total removal of the external female genitalia for non-medical reasons.” Since it creates physical and mental risk to millions of girls and women worldwide, the elimination of the practice is now specifically included in the United Nations’  17 Sustainable Development goals. However, eliminating FGM often proves to be a big challenge.

In Egypt, FGM was officially criminalized in 2008. However, the practice continues to affect more than 90% of the female population. In order to understand the persistence of FGM, it is useful to see it not just as part of the culture but also as an informal institution. As Helmke and Levitsky explain, informal institutions are a form of shared expectations, rather than shared values. Not living up to these expectations will lead to sanctions. In Egypt, girls who do not undergo FGM will often not be eligible for marriage, which could lead to economic insecurity in the future. Also, parents risk social exclusion. In addition to this, the enforcement of the formal law has not been very strong. Consequently, there is a very strong incentive for parents to comply with the informal institution and not a very strong incentive to comply with the formal law. Therefore, the outcomes are divergent and the informal institution is competing with the formal one.

It is important to differentiate between formal and informal institutions in this case, because they are likely to have different patterns of change. Whereas changing the formal institution required legal changes and strong enforcement, the change in informal institutions requires lowering the costs of non-compliance. Thus, societies need be created where parents are not at risk of social exclusion and daughters can be married to men even if they are not cut. This is a tipping model: if enough people do not comply the rules, no one will have to comply anymore. If enough resources are dedicated to this, the practice can be eliminated, as has already been demonstrated with the elimination of foot binding practices in China.

Rising Stars, Rising Returns: How Hollywood Came to Dominate the International Film Industry

By Hannah van der Ham

Around the year 1870, Hollywood was nothing but a small agricultural community. Only a few decades later, it became the most recognizable film industry in the world. Why this happened to Hollywood, and not any other nearby village or town, can be explained by path dependence.

As Pierson explains, path dependence is a process involving positive feedback, where the outcome depends on the sequence in which events unfold. The resulting path is self-reinforcing for four different reasons.

First of all, events have large unpredictability. Around the beginning of the 20th century, a few motion-picture companies had moved towards Los Angeles. By chance,  one of these companies produced a movie in Hollywood simply because it had the right settings that were needed for the particular movie. The movie, called In Old California, became a success, which resulted in more motion-picture companies moving to Hollywood. Consequently, Hollywood kept growing.

Secondly, inflexibility discourages switching from a path. The large set-up costs of the film studios and motion-picture companies provide a disincentive of rebuilding all that in a different place. The larger Hollywood becomes, the more costly this would be.

Moreover, due to nonergodicity, small events will matter, especially those in the beginning.  Because of a ban on movie theatres in Hollywood by the time In Old California was released, the movie was instead shown in Los Angeles. This allowed more people to see it and thus attracting more film makers to Hollywood. Also, if In Old California would have received a bad rating, no film makers might have moved to Hollywood and the industry would not have emerged there. However, one bad Hollywood movie now does not have a similar effect, as Hollywood is already “locked in”.

Lastly, the outcome that gets established may lead to inefficiency. Hollywood might not be the most optimal place for film making.  However, with every new movie that is produced in Hollywood, the returns increase and the possibility to move away from this path becomes more costly.