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Institutions and economic development: theory, policy and history

  • HA-JOON CHANG (a1)
Abstract
Abstract:

The article tries to advance our understanding of institutional economics by critically examining the currently dominant discourse on institutions and economic development. First, I argue that the discourse suffers from a number of theoretical problems – its neglect of the causality running from development to institutions, its inability to see the impossibility of a free market, and its belief that the freest market and the strongest protection of private property rights are best for economic development. Second, I point out that the supposed evidence showing the superiority of ‘liberalized’ institutions relies too much on cross-section econometric studies, which suffer from defective concepts, flawed measurements and heterogeneous samples. Finally, I argue that the currently dominant discourse on institutions and development has a poor understanding of changes in institutions themselves, which often makes it take unduly optimistic or pessimistic positions about the feasibility of institutional reform.

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*Email: hjc1001@cam.ac.uk
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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

M. Cimoli , G. Dosi and J. Stiglitz (eds.) (2009), Industrial Policy and Development: The Political Economy of Capabilities Accumulation, Oxford: Oxford University Press.

S. Engerman and K. Sokoloff (1997), ‘Factor Endowments, Institutions, and Differential Growth Paths among New World Economies’, in S. Haber (ed.), How Latin America Fell Behind, Stanford: Stanford University Press, pp. 260304.

E. Glaeser , R. La Porta , F. Lopez-de-Silanes , and A. Shleifer (2004), ‘Do Institutions Cause Growth?’, Journal of Economic Growth, 9 (3): 271303.

P. Hall and D. Soskice (eds.) (2001), Varieties of Capitalism, Oxford: Oxford University Press.

D. Kapur and R. Webber (2000), ‘Governance-related Conditionalities of the IFIs’, G-24 Discussion Paper Series, no. 6, Geneva: UNCTAD.

T. Kuran (2004), ‘Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation’, Journal of Economic Perspectives, 18 (3): 7190.

S. Lall and M. Teubal (1998), ‘“Market stimulating” Technology Policies in Developing Countries: A Framework with Examples from East Asia’, World Development, 26 (8): 13691386.

R. Lipsey and K. Lancaster (1956), ‘General Theory of the Second Best’, Review of Economic Studies, 24 (63): 1132.

R. La Porta , F. Lopez-de-Salinas , and A. Schleifer (2008), ‘The Economic Consequences of Legal Origins’, Journal of Economic Literature, 46 (2): 285332.

D. North (2005), Understanding the Process of Economic Change, Princeton and Oxford: Princeton University Press.

E. Ostrom (1990), Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge: Cambridge University Press.

H. Stein (2008), Beyond the World Bank Agenda – An Institutional Approach to Development, Chicago: University of Chicago Press.

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Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
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