AbstractInstitutions are the humanly devised constraints that structure political, economic, and social interaction. They consist of both informal constraints (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, property rights). Throughout history, institutions have been devised by human beings to create order and reduce uncertainty in exchange. Together with the standard constraints of economics they define the choice set and therefore determine transaction and production costs and hence the profitability and feasibility of engaging in economic activity. They evolve incrementally, connecting the past with the present and the future; history in consequence is largely a story of institutional evolution in which the historical performance of economies can only be understood as a part of a sequential story. Institutions provide the incentive structure of an economy; as that structure evolves, it shapes the direction of economic change towards growth, stagnation, or decline. In this essay, I intend to elaborate on the role of institutions in the performance of economies and illustrate my analysis from economic history.
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Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 5 (1991)
Issue (Month): 1 (Winter)
Find related papers by JEL classification:
- D00 - Microeconomics - - General - - - General
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Two Essays on Douglass North
by Peter Klein in Organizations and Markets on 2007-06-22 14:54:23
- Institutions as Capital?
by Wayne Cain in econ trek on 2011-11-13 15:57:00
RePEc Biblio mentionsAs found on the RePEc Biblio, the curated bibliography for Economics:
- > Schools of Economic Thought, Epistemology of Economics > Heterodox Approaches > Institutional Economics
- Gonzalo Escribano, 2006. "Europeanisation without Europe? The Mediterranean and the Neighbourhood Policy," EUI-RSCAS Working Papers 19, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
- Fan, Joseph P. H. & Morck, Randall & Lixin Colin Xu & Yeung, Bernard, 2007. "Does"good government"draw foreign capital ? Explaining China's exceptional foreign direct investment inflow," Policy Research Working Paper Series 4206, The World Bank.
- Lorenzo Pellegrini & Gideon Kruseman, 2008. "Institutions and Forest Management: A Case Study from Swat, Pakistan," Working Papers 2008.42, Fondazione Eni Enrico Mattei.
- Mark A. Pollack, 2007. "The New Institutionalisms and European Integration," The Constitutionalism Web-Papers p0031, University of Bath, Department of European Studies and Modern Languages.
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