Introduction: Economic Growth and Development — An Institutional Perspective

In recent decades, the study of the nature and role of institutions has become a central concern of economists and other social scientists. In part this reflects a preoccupation to establish the fundamental determinants of capital accumulation and innovation, and thereby long-term growth and development. The time has long passed when explanations of economic progress could focus only on inputs into the production process. The aggregate production function approach which stressed the need to raise the ratio of investment to income as the means of quickening the pace of self-sustained growth has been found wanting. Although both physical and human capital accumulation are important, there is ample evidence of countries enjoying only modest economic growth despite having high rates of physical capital accumulation, and of others gaining little or no growth even when education has expanded rapidly (Clague, 1997: 13).