A Cross-Country Analysis of Institutions and Performance
Chapter 2: Understanding Institutions: Nature, Performance, and Change
The institutional underpinnings of development, in both the general and water sector contexts, are increasingly recognized because the policy prescriptions based on the neoclassical approach and on public choice theory have proved equally ineffective in many contexts. In the context of natural resource management, with all its many forms of externalities, neither the price mechanism nor the creation of property rights can provide a durable solution. Therefore, policy prescriptions, which have moved from ‘getting the prices right’ to ‘getting the property rights right,’ now center on ‘getting institutions right’ (Williamson 1994: 3). For a better appreciation of this policy shift and as background for our subsequent analysis, we begin with a short but critical review of the theoretical literature on institutional economics. The review focuses on the nature and definitions of institutions, their key features and their analytical and methodological implications, the relation between institutions and economic performance, theories of institutional change, and the forces initiating and sustaining the process of institutional change in a generic context. INSTITUTIONS: NATURE AND DEFINITION Institutions are a pervasive phenomenon with diverse origins as they affect various dimensions of human relationships and interactions. Consequently, they have diverse definitions and interpretations, reflecting different disciplinary perspectives and theoretical traditions. But, beneath this diversity lies an undercurrent of convergence on the generic meaning and purpose of institutions. This section will show this convergence by sifting through various interpretations and definitions of institutions presented in the literature. Institutions, Knowledge, and Information Simon observes that ‘it is because...
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.