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Limits of the New Institutional Economics Approach to African Development

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  • Geoffrey Schneider
  • Berhanu Nega

Abstract

In the last two decades, there has been a marked shift in the research on Sub-Saharan Africa from standard neoclassical analysis to new institutional economics (NIE). The increasing emphasis on NIE is reflected in a wide range of works by international financial institutions and scholars. However, the NIE approach retains fundamental limitations due to its narrow interpretation of institutions, its over-reliance on analysis of transactions costs and property rights, and its ahistorical attachment to markets and private sector firms as major engines of development. Furthermore, NIE typically fails to look “inside institutions” to identify the complex cultural factors that shape the interests and behaviors of the members of institutions. This paper engages in a critique of NIE analysis of Sub-Saharan Africa’s economic development, and suggests the need for a nuanced analysis of property rights and culture, along with development programs to address inequality and poverty and to foster state-led development.

Suggested Citation

  • Geoffrey Schneider & Berhanu Nega, 2016. "Limits of the New Institutional Economics Approach to African Development," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 435-443, April.
    • Handle: RePEc:mes:jeciss:v:50:y:2016:i:2:p:435-443
    DOI: 10.1080/00213624.2016.1176504
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    Cited by:

    1. Essiane, Patrick-Nelson Daniel, 2020. "De l'Ancienne Economie Institutionnelle à la Nouvelle Economie Institutionnelle: une introduction à quelques débats [Old Institutional Economics and New Institutional Economics: an Introduction to ," MPRA Paper 102858, University Library of Munich, Germany.
    2. Ehret, Michael & Olaniyan, Rotimi, 2023. "Banking the unbanked. Constitutive rules and the institutionalization of mobile payment systems in Nigeria," Journal of Business Research, Elsevier, vol. 163(C).
    3. Fernando Lopez-Castellano & Roser Manzanera-Ruiz & Carmen Lizárraga, 2019. "Deinstitutionalization of the State and Violence in Sub-Saharan Africa: A Contribution to the Critique of the Neoinstitutionalist Analysis of Development," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(3), pages 418-437, September.

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