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Social capital, social norms and the New Institutional Economics

  • Keefer, Philip
  • Knack, Stephen

Douglass North (1990) describes institutions as the rules of the game that set limits on human behavior, now a universally-accepted definition. North and others especially underline the crucial role of informal social norms. They predict that, like all rules of the game, social norms should affect the economic prosperity enjoyed by individuals and countries – that they should have a crucial impact, for example, on economic and political development. In fact, substantial evidence demonstrates that social norms prescribing cooperative or trustworthy behavior have a significant impact on whether societies can overcome obstacles to contracting and collective action that would otherwise hinder their development. Much of this evidence comes from outside the new institutional economics, emerging instead from scholarly research in the field of “social capital.” A review of this evidence, and its implications for our understanding of the role of social norms and institutions, is therefore the focus of this chapter.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25025.

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Date of creation: 2003
Date of revision: 2004
Publication status: Published in Handbook of New Institutional Economics chapter 27 (2005): pp. 700-725
Handle: RePEc:pra:mprapa:25025
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