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Rules of the Game and Rules Inside the Game: a Complex Framework of European Development Policies


  • Garofalo, Maria Rosaria
  • Senatore, Luigi


Following the transaction-costs politics (TCP) approach (Dixit 1996), this paper tries to spell out the making of that development policy, as prevailing in the Objective 1 area in Europe from 1999, based on decentralization and multilevel governance, and essentially implied from the success of endogenous growth paradigm. The TCP approach allows for the explanation of both the genesis and evolution of a policy in real time, by considering (i) the policy-making as a set of general rules and of individual intervention actions, and (ii) this set in the same way of incomplete, flexible and dynamic contracts (Williamson 1985). In this theoretical context we reconsider the underlying innovative notion of decentralization, that consists in a devolution process of political power to local agents and their communities, by promoting local partnership rather than a mere administrative delegation of function from central to local level (Bardhan 1996). The outcome (success or failure) of this development policy approach is strictly connected either with new frame of governance rules or with their feasible "use": this means that a rules scheme would be not neutral with respect to objectives choices (Stiglitz 2001). In short, we refer to the agency model in order to explain either the enforcement process of rules or local implementation of specific development policies and measures. Finally the outcome policy will be not predetermined, but it will depend from how the agents (formal, informal, individual, groups, organisations) interact inside a community, that benefits by the set of development measures (complementarity) (Aoki 2001;Ray 2000).

Suggested Citation

  • Garofalo, Maria Rosaria & Senatore, Luigi, 2002. "Rules of the Game and Rules Inside the Game: a Complex Framework of European Development Policies," MPRA Paper 7003, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:7003

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    More about this item


    development policies; transaction-costs; agency model ; multiprincipals; multiagents; collusion; social norms; complementarity;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy


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