The Rise and Fall of Enforcement Institutions: An Example of Religion and Secularism
Societies in Western civilisation enforce their rules through formal institutions such as secularism (SES), whereas in less developed civilisations often rely on informal institutions such as religion (RES). The present paper attempts to explain the determinants of societies’ choice between different enforcement systems, and their implications for society development using an example of two different enforcement models: one informal (RES) and one formal (SES). We find that, because the RES is based on beliefs, its efficiency depends heavily on its credibility, making it little flexible and highly susceptible to conflicts in dynamic environments. In contrast, because under the SES societal rules are enforced through a formal legal enforcement sector, the SES is more flexible though also more costly than the RES. The empirical evidence strongly supports our findings that wealthy, dynamic and fast growing economies typically choose the SES for enforcing societal norms and rules.
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- Reyerson, Kathryn, 2006. "Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. By Avner Greif. Cambridge: Cambridge University Press, 2006. Pp. xix, 503. $34.99, paper," The Journal of Economic History, Cambridge University Press, vol. 66(04), pages 1080-1081, December.
- Kingston, Christopher & Caballero, Gonzalo, 2009. "Comparing theories of institutional change," Journal of Institutional Economics, Cambridge University Press, vol. 5(02), pages 151-180, August.
- Azim Raimbaev, 2011. "The case of transition economies: what institutions matter for growth?," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 1-33.
- Platteau, Jean-Philippe, 2008. "Religion, politics, and development: Lessons from the lands of Islam," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 329-351, November.
- Azim Raimbaev, 2011. "The case of transition economies: what institutions matter for growth?," EERI Research Paper Series EERI_RP_2011_16, Economics and Econometrics Research Institute (EERI), Brussels.
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