Chapter 1: Institutions, Globalisation and Empowerment: An Overview of Issues
Kartik C. Roy and Jörn Sideras INTRODUCTION Since the early 1990s, the crucial role played by institutions in the process of economic development, and in explaining global diﬀerence in development outcomes, has gained increasing attention from academia, policymakers and international ﬁnancial institutions. During the 1950s and 1960s, investments in physical capital and infrastructure were seen as the essential stimuli for economic development. The emphasis during the 1970s shifted to investment in human capital as it is considered to be one of the most fundamental requirements in the achievement of development outcomes. But during the course of the 1980s and 1990s the centre of focus shifted to enhancing economic management through a greater play of market forces within and between countries. In line with this development in thinking over the last two decades, policy has focused on the liberalisation of product and factor markets within countries and also a thrust towards the dismantling of trade barriers and barriers preventing the free ﬂow of funds between countries in an attempt towards globalisation. However, the issue as to whether globalisation has been successful in reducing inter- and intra-country income inequality has recently emerged as a hotly debated topic.1 While the jury is still out in this debate, the fact remains that despite the provision of massive ﬁnancial resources and the prescription of well-meaning policies to improve investment in human and physical capital and the adoption of market-orientated policies, the results have been in many countries disappointing. A consensus now exists that...
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