Written on 28 January 2013.
Florencio Lopez de Silanes
This high-level meeting dealt with the recovery of the European economy from the crisis of recent years. The issues on the agenda addressed the adjustment of the real economy in both the EU and beyond, focusing on changes in the financial sector’s operating conditions in coming years.
Participants at the conference included top-level researchers, well-known central bank managers and representatives of the financial sector.
The conference was hosted by Erkki Liikanen, Governor of the Bank of Finland, and Ewald Nowotny, Governor of the Oesterreichische Nationalbank. The keynote speakers where Professor López deSilanes (EDHEC Business School), Professor Danny Quah (London School of Economics), and Seppo Honkapohja, Member of the Board (Bank of Finland).
During his keynote speech entitled "Growth, institutions and human capital", Professor Florencio López de Silanes presented the results of a cross-country long-term analysis studying the connection between growth, institutions and human capital. There are three main conclusions of this analysis. First, most indicators of institutional quality, that are used to support the argument that institutions are leading the growth, seem to be inappropriate because they are subjective; they follow rather than predict growth. In contrast, it is the institutions of law and the regulation of markets and economic life that do explain some of the differences in development. Finally, the results also indicate that, beyond institutions, human capital is a key source of growth, and explains the differences in development across regions/provinces within countries.
Human capital also explains government efficiency across countries. Many countries exhibit poorly performing governments, as evidenced by surveys of citizens, businessmen, foreign investors, or local experts. There are two broad reasons for bad government: political economy (governments in poor countries are less accountable) and productivity (low productivity of government services, similar to the private sector).
Taken at face value, this work has implications for the policies to be implemented so that economies rebound and to ensure stable long-term growth. Institutions, such as law, matter but they do not explain everything. Education is crucial to ensure long-term growth and a transformation of the economy. European countries have very similar institutions, some of them possibly not the best, but the evidence suggests that part of the better performance of a few of the economies in the region may be related to their high human capital.
About Professor López de Silanes:
Graduated from Harvard with a PhD in Economics, Professor López de Silanes joined EDHEC Business School in 2007 as Professor of Finance. He is specialised in international corporate finance and financial markets, legal reform, and privatisation.
Professor López-de-Silanes has been ranked as #1 European professor in Management and Economics for academic citations. He has published widely in leading economics and finance journals, including American Economic Review, Journal of Economic Literature, Journal of Finance, Journal of Political Economy, and Quarterly Journal of Economics. He has been repeatedly distinguished for research achievements. Since November 2004, he has been one of the three most cited researchers in the area of economics and business according to ESI Statistics. He has also been the second most cited professor in the world in the fields of economics and business according to the 2008 edition of the ScienceWatch rankings of management and economics professors. Drawn up by Thomson Reuters and based on an analysis of 11,000 international journals and 10 million articles, spanning a 10-year publication cycle, the ranking is a key indicator for the global academic community.
He has previously held faculty positions at University of Amsterdam, Yale, Harvard, and ITAM.