Table of Contents

Economic Welfare, International Business and Global Institutional Change

Economic Welfare, International Business and Global Institutional Change

The Locke Institute series

Edited by Ram Mudambi, Pietro Maria Navarra and Giuseppe Sobbrio

The distinguished authors in this volume address the fundamental causes for such heterogeneous international experiences, placing particular emphasis on the role of institutions. They demonstrate how the study of economic development is increasingly linked to the development of institutions, which allow for more complex exchanges to occur in markets and societies. Institutions can be understood as rules or constraints that channel individuals' actions in specific directions, and can be formal or informal depending on their genesis. The book highlights the connection between institutions and economic welfare by examining countries at different stages of development. Although the authors' study material effects, they also look at individual well-being which is more strongly influenced by the non-material products of institutions such as opportunity, freedom and relationships. They move on to highlight the role of institutions in global business, in terms of innovation, entrepreneurship and foreign direct investment. In the concluding chapters they focus on the actual process of transition from one institutional framework to another. Amongst other examples, they examine reforms to international financial institutions and constitutional adjustments in transition countries.

Chapter 1: Perspectives on Global Institutional Change

Ram Mudambi, Pietro Navarra and Giuseppe Sobbrio

Subjects: business and management, international business, economics and finance, public choice theory, politics and public policy, public choice

Extract

Ram Mudambi, Pietro Navarra and Giuseppe Sobbrio I am not an advocate for frequent changes in laws and constitutions. But laws and institutions go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors. (Thomas Jefferson) 1. INTRODUCTION While the circumstances in which humanity finds itself are constantly changing, the great truths stand the test of time. The above quote from Jefferson is as relevant today as it was when it was written over two centuries ago. Jefferson understood the importance of making laws and institutions that are both supportive of a healthy polity and economy as well as being adaptable to change and development. The creation, preservation and transformation of political institutions and their impact on societal interactions is the subject matter of this volume. Individuals are shaped by and act through structures, organizations and institutions. Therefore, both individual choices and social outcomes cannot be explained without some reference to the larger social institutional context in which their actions take place. Economic historians studying the global shift from stagnation to growth during the twentieth century have pointed out that today there are relatively...

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