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Understanding the Relationship between Institutions and Economic Development: Some Key Theoretical Issues


  • Chang, Ha-Joon


The paper tries to improve our understanding on the role of institutions in development by critically examining the current orthodox discourse on institutions and highlighting some of its key problems. After discussing some definitional problems, the chapter examines a number of problems in the orthodox literature arising from the widespread failure to distinguish between the forms and the functions of institution. Then it critically examines the excessive emphasis on property rights in the orthodox literature. Finally, it discusses a number of problems that arise from the simplistic view on institutional change that underlies the orthodox view on institutional persistence.

Suggested Citation

  • Chang, Ha-Joon, 2006. "Understanding the Relationship between Institutions and Economic Development: Some Key Theoretical Issues," WIDER Working Paper Series DP2006/05, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:dp2006-05

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    References listed on IDEAS

    1. Ha-Joon Chang, 2005. "Globalization, Global Standards, and the Future of East Asia," Global Economic Review, Taylor & Francis Journals, vol. 34(4), pages 363-378.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    3. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
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    Cited by:

    1. Melanie S. Milo, 2007. "Integrated Financial Supervision : An Institutional Perspective for the Philippines," Finance Working Papers 22667, East Asian Bureau of Economic Research.
    2. Borrmann, Axel & Busse, Matthias, 2006. "The institutional challenge of the ACP/EU Economic Partnership Agreements," HWWI Research Papers 2-3, Hamburg Institute of International Economics (HWWI).
    3. Duarte N. Leite & Sandra T. Silva & Oscar Afonso, 2014. "Institutions, Economics And The Development Quest," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 491-515, July.
    4. Savoia, Antonio & Easaw, Joshy & McKay, Andrew, 2010. "Inequality, Democracy, and Institutions: A Critical Review of Recent Research," World Development, Elsevier, vol. 38(2), pages 142-154, February.
    5. Shaikh, Salman, 2012. "Examining Theories of Growth & Development & Policy Response Based on Them from Islamic Perspective," MPRA Paper 38530, University Library of Munich, Germany.
    6. Reinert, Erik S., 2006. "Institutionalism Ancient, Old and New: A Historical Perspective on Institutions and Uneven Development," WIDER Working Paper Series 077, World Institute for Development Economic Research (UNU-WIDER).
    7. Cimoli, Mario & Porcile, Gabriel, 2017. "Micro-macro interactions, growth and income distribution revisited," Desarrollo Productivo 212, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. William Orlando Prieto Bustos, 2012. "Institutional Effect over Economic Growth: New Evidence for Latin America," DOCUMENTOS DE TRABAJO UCATOLICA 009591, UNIVERSIDAD CATOLICA DE COLOMBIA.
    9. Milo, Melanie S., 2007. "Integrated Financial Supervision: an Institutional Perspective for the Philippines," Discussion Papers DP 2007-17, Philippine Institute for Development Studies.
    10. Alan Martina, 2009. "On the Constrained Contribution of Advances in Medical Knowledge to the Economic Growth of Developing Countries," ANU Working Papers in Economics and Econometrics 2009-504, Australian National University, College of Business and Economics, School of Economics.
    11. Gülçin BEKEN, 2015. "Anadolu International Conference in Economics (Econanadolu 2015)," Turkish Economic Review, KSP Journals, vol. 2(2), pages 139-140, June.
    12. Zdenìk Kudrna & Juraj Medzihorsky, 2012. "International banking standards in emerging markets: testing the adaptation thesis in the European Union," Working Papers IES 2012/06, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Mar 2012.
    13. Lawrence King & Osvaldo Gómez Martínez, 2010. "Property Rights Reform and Development: A Critique of the Cross-National Regression Literature," Working Papers wp216, Political Economy Research Institute, University of Massachusetts at Amherst.
    14. Alessandro Romagnoli & Luisa Mengoni, 2009. "The challenge of economic integration in the MENA region: from GAFTA and EU-MFTA to small scale Arab Unions," Economic Change and Restructuring, Springer, vol. 42(1), pages 69-83, May.
    15. repec:pid:journl:v:55:y:2016:i:1:p:49-72 is not listed on IDEAS
    16. Joan Oriol Prats, 2007. "Revisión crítica de los aportes del institucionalismo a la teoría y la práctica del desarrollo," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 9(16), pages 121-148, January-J.
    17. Subarna Basnet, 2017. "Institutions and Economic Growth of Landlocked Nations – part of dissertation," CEsA Working Papers 156, CEsA - Center for African, Asian and Latin American Studies.
    18. Anis Chowdhury, 2012. "Structural Adjustment and Crises –Which Way Now?," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 4(1), pages 85-118, April.
    19. Kiiza, Julius, 2006. "Institutions and Economic Performance in Africa: A Comparative Analysis of Mauritius, Botswana and Uganda," WIDER Working Paper Series 073, World Institute for Development Economic Research (UNU-WIDER).
    20. Efendic, Adnan & Pugh, Geoff & Adnett, Nick, 2011. "Institutions and economic performance: A meta-regression analysis," European Journal of Political Economy, Elsevier, vol. 27(3), pages 586-599, September.
    21. Luděk Kouba, 2009. "Návrh klasifikace soudobých sociálně-ekonomických přístupů k teorii růstu
      [The Proposal of Original Classification of Contemporary Social-Economic Approaches to the Growth Theory]
      ," Politická ekonomie, University of Economics, Prague, vol. 2009(5), pages 696-713.


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