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Institutions and Norms in Economic Development


  • Mark Gradstein

    (Ben-Gurion University)

  • Kai A. Konrad

    (Free University of Berlin)


Recent decades have seen almost unprecedented economic growth in income per capita around the world. Yet this extraordinary overall performance masks a wide variation in growth rates across different countries, with persistent underdevelopment in some parts of the world. This disparity constitutes "the development puzzle," and it is exemplified by growth spurts in China and India that contrast markedly with disturbingly low growth rates in sub-Saharan Africa. In this volume, economists address issues of inequality and growth, going beyond narrowly defined "economic" factors to consider the effect on growth of the structure of governance, the quality of a country's governing bodies, and the social norms that govern collective decision-making. The contributors use both formal modeling and empirical analyses to examine how the "soft factors" of institutions and norms interact with growth performance, natural resource endowments, and economic performance. They consider such topics as the effects of decentralization in Africa, fiscal discipline in Indian states, natural resource wealth as a cause of corruption, social violence during the Indonesian financial crisis of 1997 and 1998, and the effect of strong national identity on redistributive politics. Some of their findings suggest that not only do institutions and norms affect economic performance, economic performance itself is a key factor in explaining such governance failures as corruption and the frequency and intensity of economic conflict.

Suggested Citation

  • Mark Gradstein & Kai A. Konrad (ed.), 2007. "Institutions and Norms in Economic Development," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207284x, January.
  • Handle: RePEc:mtp:titles:026207284x

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    References listed on IDEAS

    1. Tornell, Aaron & Velasco, Andres, 2000. "Fixed versus flexible exchange rates: Which provides more fiscal discipline?," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 399-436, April.
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    4. Ricardo Hausmann & Michael Gavin & Carmen Pagés & Ernesto H. Stein, 1999. "Financial Turmoil and the Choice of Exchange Rate Regime," IDB Publications (Working Papers) 1108, Inter-American Development Bank.
    5. Kenen, Peter B., 2000. "Currency areas, policy domains, and the institutionalization of fixed exchange rates," LSE Research Online Documents on Economics 20170, London School of Economics and Political Science, LSE Library.
    6. Giancarlo Corsetti & Paolo Pesenti, 2001. "Welfare and Macroeconomic Interdependence," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 421-445.
    7. Obstfeld, Maurice & Rogoff, Kenneth, 2000. "New directions for stochastic open economy models," Journal of International Economics, Elsevier, vol. 50(1), pages 117-153, February.
    8. Miguel A Savastano & Paul R Masson & Sunil Sharma, 1997. "The Scope for Inflation Targeting in Developing Countries," IMF Working Papers 97/130, International Monetary Fund.
    9. Amartya Lahiri & Carlos A. Végh, 2002. "Living with the Fear of Floating: An Optimal Policy Perspective," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 663-704 National Bureau of Economic Research, Inc.
    10. Klein, Michael W. & Marion, Nancy P., 1997. "Explaining the duration of exchange-rate pegs," Journal of Development Economics, Elsevier, vol. 54(2), pages 387-404, December.
    11. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
    12. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    13. Svensson, Lars E. O., 2000. "Open-economy inflation targeting," Journal of International Economics, Elsevier, vol. 50(1), pages 155-183, February.
    14. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 869-903.
    15. Richard Clarida & Jordi Gali & Mark Gertler, 2001. "Optimal Monetary Policy in Open versus Closed Economies: An Integrated Approach," American Economic Review, American Economic Association, vol. 91(2), pages 248-252, May.
    16. Sebastian Edwards & Miguel A. Savastano, 1999. "Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know?," NBER Working Papers 7228, National Bureau of Economic Research, Inc.
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    More about this item


    economic development; growth; institutions; norms;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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