Institutions and Development

Institutions and Development

Advances in New Institutional Analysis series

Mary M. Shirley

A landmark contribution to our understanding of economic development. This significant book argues that fundamental changes in deeply rooted institutions do not happen because of outsiders’ money, advice, pressures, or even physical force; which explains why foreign aid has not, and can not, improve institutions. The impetus for changing institutions must come from within a society, and the author shows how groups of local scholars contribute to institutional change and development when the political opportunity presents itself.

Chapter 7: The Role of Scholars and Scholarship in Economic Development

Mary M. Shirley

Subjects: development studies, development studies, economics and finance, development economics, institutional economics


Institutional change ultimately depends on the decisions of a country’s citizens and the individuals who govern them. Under ordinary circumstances neither the general public nor their leaders favor radical change in their society’s institutional framework. This is understandable since an institutional framework provides the basic constructs for human interaction (North 2005b). Radical change in such basic constructs would require not merely changing the rules of the game, but what Shepsle described as replacing one game form with another, transforming the current institutional regime into something substantially different (Shepsle 2001). This does not happen easily. As we saw in Chapter 3, a society’s institutional framework is molded through a long history of ruling groups structuring rules and promoting and enforcing norms that perpetuate their interests. This explains why durable institutional frameworks are self-enforcing in Greif’s sense – no one with the power to change them has an incentive to do so. The ruling elites may be overthrown by non-elites, but the institutional framework will endure as long as it serves to perpetuate the power of the new ruling group as much as it did the old ones. The rhetoric and the actors may change, but the rules and norms that limit access and competition do not. It is not surprising that those who stand to lose if an institutional framework is altered resist change and are usually powerful enough to prevent it. It is more surprising that those who are not benefiting from the status quo also resist change. As...

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