A ‘Tiresome Complexity’? Rent-seeking, Devolution and Economic Performance in Northern Ireland, 1945–72

Institutional structures are viewed by many contemporary economic historians, following the pioneering work of Douglass North, as being the ultimate determinant of economic growth (North, 1990, 2005). Baumol’s work on the relationship between institutions and entrepren-eurship has provided further theoretical support for North’s position (Baumol, 1990). According to Baumol, the study of economic history suggests that it is institutional structures that determine what projects entrepreneurs pursue. It is the balance between these different types of entrepreneurship that contribute to determining growth and development. Baumol’s analysis of institutions and entrepreneurship can be summarized by his three key propositions: (1) The rules of the game that determine the relative payoffs to different entrepreneurial activities do change dramatically from one time and place to another; (2) ‘Entrepreneurial behaviour changes direction from one economy to another in a manner that corresponds to the variation in the rules of the game’ (Baumol, 1990: 899); (3) ‘The allocation of entrepreneurship between productive and unproductive activities, though by no means the only pertinent influence, can have a profound effect on the innovativeness of the economy and the degree of dissemination of its technological discoveries’ (Baumol, 1990: 909).