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Institutions and Development: What We (Think We) Know, What We Would Like to Know

Author

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  • Paul G. Hare
  • Junior R. Davis

Abstract

This paper takes the form of an extended literature review, outlining the key ideas that will need to be developed further in the course of the IPPG Research Programme. After an extended introduction, the next two sections are conceptual, the former elucidating key concepts and definitions, the latter examining various approaches to the analysis of institutions relevant for economic growth. Then the paper reviews much of the available evidence linking institutions and growth and covers in some detail the evidence regarding economic institutions, confirming that institutions matter. However, the findings from different studies are far from consistent in terms of identifying exactly what it is that matters. Given the prevalence of weak or poorly functioning states amongst the poorest countries of the world, the paper also reviews literature on the political aspects of development, particularly in relation to the role of institutions. Likewise, the paper selectively illustrates the ideas of earlier sections through the discussion of two topics: trade policy and the institutions needed for it to work well; and institutions that make for a good business environment. The final section outlines some preliminary working hypotheses about institutions and development. While emphasising pro-poor growth throughout, the paper finds that growth itself is a fundamental, necessary condition for achieving pro-poor growth. Given that, a serious analysis of institutions and growth must pay attention to the need for institutions that foster and promote profit-seeking accumulation (without which little sustained growth is likely to occur).

Suggested Citation

  • Paul G. Hare & Junior R. Davis, 2006. "Institutions and Development: What We (Think We) Know, What We Would Like to Know," CERT Discussion Papers 0603, Centre for Economic Reform and Transformation, Heriot Watt University.
  • Handle: RePEc:hwe:certdp:0603
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    File URL: http://www2.hw.ac.uk/sml/downloads/cert/wpa/2006/dp0603.pdf
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    References listed on IDEAS

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    1. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
    2. Mark E. Schaffer & Gerard Turley, 2000. "Effective versus Statutory Taxation: Measuring Effective Tax Administration in Transition Economies," William Davidson Institute Working Papers Series 347, William Davidson Institute at the University of Michigan.
    3. Rafael La Porta & Florencio López-de-Silanes, 1999. "The Benefits of Privatization: Evidence from Mexico," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1193-1242.
    4. Laffont, Jean-Jacques & Meleu, Mathieu, 1999. "A Positive Theory of Privatisation for Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(0), pages 30-67, December.
    5. Friedrich Schneider, 2005. "Shadow Economies of 145 Countries all over the World: What Do We Really Know?," CREMA Working Paper Series 2005-13, Center for Research in Economics, Management and the Arts (CREMA).
    6. World Bank, 2005. "Economic Growth in the 1990s : Learning from a Decade of Reform," World Bank Publications, The World Bank, number 7370, June.
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    Citations

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    Cited by:

    1. Okojie, Christiana & Monye-Emina, A. & Eghafona, K. & Osaghae, G. & Ehiakhamen, J.O., 2009. "Institutional environment and access to microfinance by self-employed women in the rural areas of Edo state, Nigeria:," NSSP working papers 3, International Food Policy Research Institute (IFPRI).
    2. Bakanova, Marina & Estrin, Saul & Pelipas, Igor & Pukovich, Sergei, 2006. "Enterprise Restructuring in Belarus," IZA Discussion Papers 2148, Institute for the Study of Labor (IZA).
    3. Marina Bakanova, & Saul Estrin & Igor Pelipas & Sergei Pukovic, 2006. "Enterprise Restructuring in Belarus," William Davidson Institute Working Papers Series 823, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    institutions; pro-poor growth; weak states; cultural issues; institutional matrix; investment and accumulation;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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