Chapter 2
Distinguishing Rule-Based and Relation-Based Countries
How to Measure Governance Environment
Chapter 1 gives us an overview of the theory of rule-based and relation-based governance. An immediate question is, which countries are rule-based and which are relation-based? For instance, if we consider entering the market of India, how do we know whether it is rule-based or relation-based? In this chapter, we will discuss how to evaluate whether a country is relatively more rule-based or relation-based, and we will measure the governance environments of the countries on which we have data. For business readers, understanding the criteria that we use to evaluate the governance system will provide a tool to assess the business environment ...
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