Institutions, Contracts and Organizations
Show Less

Institutions, Contracts and Organizations

Perspectives from New Institutional Economics

Edited by Claude Ménard

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.
Buy Book in Print
Show Summary Details

Chapter 10: Formal versus informal institutions in economic development

Philip Keefer and Mary M. Shirley

Extract

88 Sources of growth: technology, natural endowments or institutions? 10. Formal versus informal institutions in economic development Philip Keefer and Mary M. Shirley INTRODUCTION The theory and recent cross-country evidence linking institutions and economic growth suggest that institutional development ought to be at the core of economic development policy. However, neither the academic literature nor development practitioners have so far been able to devise concrete guidelines on how countries can move from a situation of insecure property rights and arbitrary and inefficient government policy making to an environment of security and predictability. The purpose of this chapter is quite narrow when measured against this significant gap in our understanding of economic development. Our objective here is to review the theory and evidence that underlines the importance of this gap; to offer some quantification of the links between more traditional economic policy reform and the institutional quality of countries; and to crystallize the dilemmas that confront policy makers who appreciate the need to embark on institutional reform. We review cross-country and case-study evidence demonstrating that good macroeconomic policy is not enough to trigger growth. Instead, countries that score better on cross-country measures of the security of contract and property rights, one measure of institutional development, derive a much stronger growth effect from good macroeconomic policies than do other countries. In fact, by some estimates countries with good institutional scores and weak macroeconomic policies have higher growth rates than countries with good macro policies and weak institutions. While the...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.