Instiutions

In: Business and Management

Submitted By kenny777
Words 14840
Pages 60
Review of

Review of Economics and Institutions
ISSN 2038-1379 DOI10.5202/rei.v1i2.1

ECONOMICS and INSTITUTIONS

Vol. 1 – No. 2, Fall 2010 – Article 1

www.rei.unipg.it

The Role of Institutions in Growth and Development
Massachusetts Institute of Technology

Daron Acemoglu

Harvard University and Weatherhead Center for International Affairs

James Robinson

Abstract: In this paper we argue that the main determinant of differences in prosperity across countries are differences in economic institutions. To solve the problem of development will entail reforming these institutions. Unfortunately, this is difficult because economic institutions are collective choices that are the outcome of a political process. The economic institutions of a society depend on the nature of political institutions and the distribution of political power in society. As yet, we only have a highly preliminary understanding of the factors that lead a society into a political equilibrium which supports good economic institutions. However, it is clear that it is the political nature of an institutional equilibrium that makes it very difficult to reform economic institutions. We illustrate this with a series of pitfalls of institutional reforms. Our analysis reveals challenges for those who would wish to solve the problem of development and poverty. That such challenges exist is hardly surprising and we believe that the main reason for such challenges is the forces we have outlined in this paper. Better development policy will only come when we recognize this and understand these forces better. Nevertheless, some countries do undergo political transitions, reform their institutions, and move onto more successful paths of economic development. We also can learn a lot from these success stories.
JEL classification: O10, P10, P17 Keywords: economic growth, development,…...

Similar Documents

Indian Budget

...provide skill training to 1 lakh youth in next 5 years. Entire cost to be borne by Centre. SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS   Allocation under NSAP raised by 37 per cent to `8,447 crore in 2012-13. In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, pension amount to be raised from `200 to `300 per month. Lump sum grant on the death of primary breadwinner of a BPL family, in the age group 18-64 years, doubled to `20,000. To enhance access under SWAVALAMBAN scheme, LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators. Special grant provided to various universities and academic instiutions.    Security     A provision of `1,93,407 crore made for Defence services including `79,579 crore for capital expenditure. Any further requirement to be met. `1,185 crore proposed to be allocated for construction of nearly 4,000 residential quarters for Central Armed Police Forces. `3,280 crore proposed to be allocated for construction of office building of Central Armed Police Forces. Scheme to create National Population Register likely to be completed within next 2 years. 9 http://indiabudget.nic.in GOVERNANCE UID-Aadhaar  Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons. Black Money  Proposal to lay a White Paper......

Words: 4603 - Pages: 19

Us Finanical Crisis 2009

...to enterprises to either downsize operations or shutdown, which brings us back to unemployment. Companies buy other company’s stocks to generate revenue investments. When the companies they invest in fold, they lose money and their financial status and working capital are affected. This may or may not affect their operations. However, if they lose significantly in a period of general financial crisis, there is a greater likelihood that their operations will be adversely affected, which brings us back to the problem of employment. While the illustration is simplistic, it gives a general idea of the cyclic nature of the problem. Impact on Business. Directly affected by the subprime mortgage scheme were the financial and investment instiutions who were left unable to collect debts. As indicated in Box 1 among those affected were Bank of America, Lehman Brothers, Goldman Sachs Morgan Stanley, and the American Insurance Group (AIG) big names in their industries. When banks find it difficult to re-finance themselves, they reduce lending to their customers thereby affecting real economic activity. Reduced lending by banks affects industries and sectors that are dependent on external capital. Companies also generate capital through the sales of shares. Companies offer shares or equity to the public through the stock exchanges, investors purchase them in the hope of gaining dividends or profits resulting to positive differences between buying and selling prices of the......

Words: 9783 - Pages: 40

Hkhkhk

...training to 1 lakh youth in next 5 years. Entire cost to be borne by Centre. SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS Allocation under NSAP raised by 37 per cent to `8,447 crore in 2012-13. In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, pension amount to be raised from `200 to `300 per month. Lump sum grant on the death of primary breadwinner of a BPL family, in the age group 18-64 years, doubled to `20,000. To enhance access under SWAVALAMBAN scheme, LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators. Special grant provided to various universities and academic instiutions. Security A provision of `1,93,407 crore made for Defence services including `79,579 crore for capital expenditure. Any further requirement to be met. `1,185 crore proposed to be allocated for construction of nearly 4,000 residential quarters for Central Armed Police Forces. `3,280 crore proposed to be allocated for construction of office building of Central Armed Police Forces. Scheme to create National Population Register likely to be completed within next 2 years. UID-Aadhaar Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons. Black Money Proposal to lay a White Paper on Black Money in current session of......

Words: 26489 - Pages: 106

What Is the Role of Institutions According to North? How Far Does This Theory Go Towards Explaining the Contours of World Development in the Pre-Modern Growth Era?

...growth, utilisation, and eventually, impact on the societies. Cameron and Neal (2003) summed up the importance of institutions by, coming into agreement with North, suggesting that institutional change is perhaps the most dynamic source of change in the whole economy. The sum of the impacts coming from population growth, resources management and technological advancement, which are heavily influenced by the nations’ institutional structure, determined the contours of world development in the pre-modern growth era. (1484 words) References Cameron, R., & Neal, L. (2003). A Concise Economic History Of The World: From Paleolithic Times To The Present. New York: Oxford University Press. Carden, A. (2007). Christian Ethics, Formal Instiutions, and Economic Growth. American Review of Political Economy, 34-53. Harreld, D. J. (2010, February 4). The Dutch Economy in the Golden Age (16th-17th Centuries). Retrieved January 5, 2012, from EH.Net Encyclopedia: http://eh.net/encyclopedia/article/Harreld.Dutch Hodgso, G. M. (2006). What are Institutions? Jornal of Economic Issues, Vol. 40, No. 1. Kuran, T. (1996). The Discontents of Islamic Economic Morality. Economic Review Papers and Proceedings 86(2), 438-442. Kuran, T. (2003). Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation. Working Paper: Mercatus Center and University of Southern California. Maddison, A. (2005). Growth & Interaction in the World Economy: The......

Words: 1855 - Pages: 8

Subprime

...buying was expected in 2006. "Speculators left the market in 2006, which caused investment sales to fall much faster than the primary market." homes had not traditionally been treated as investments like stocks, this behavior changed during the housing boom. For example, one company estimated that as many as 85% of condominium properties purchased in Miami were for investment purposes. Media widely reported the behavior of purchasing condominiums prior to completion, then "flipping" (selling) them for a profit without ever living in the home. Some mortgage companies identified risks inherent in this activity as early as 2005, after identifying investors assuming highly leveraged positions in multiple securities. ROLE OF FIANCIAL INSTIUTION A variety of factors have caused lenders to offer an increasing array of higher-risk loans to higher-risk borrowers. These high risk loans included the "No Income, No Job and no Assets" loans, sometimes referred to as Ninja loans. The share of subprime mortgages to total originations was 5% ($35 billion) in 1994 , 9% in 1996 , 13% ($160 billion) in 1999 , and 20% ($600 billion) in 2006. A study by the Federal Reserve indicated that the average difference in mortgage interest rates between subprime and prime mortgages (the "subprime markup" or "risk premium") declined from 2.8 percentage points (280 basis points) in 2001, to 1.3 percentage points in 2007. In other words, the risk premium required by lenders to offer a subprime......

Words: 13058 - Pages: 53

Sociology

...literature. Karma, dharma, Maya, samsara and moksha are certain Sankritic theological focuses.  Such ideas spread with Harikathas, where stories with the above mentioned ideas would be recited at festivities to a religious audience. It was only later through British development of communication that such ideas spread through wider expanses.  The introduction of the western political institutions like parliamentary democracy has also contributed to the increase in sanskritization of the country. WESTERNIZATION Acording to M.N. Srinivas, ‘Westernisation’ refers to ‘the changes brought about in Indian society and culture as a result of over 150 years of Britsh rule and the term subsumes means changes ocuring at diferent levels - technology, instiutions, ideology, values Westernization is a much simpler and newer concept than Sankritisation. British rule produced radical and lasting changes in Indian society and culture. The new technology and the revolution in communication which it brought about enabled the British to integrate the country as never before in its history. The establishment of Pax - Britannica put an end once and for all the local wars which were endemic in pre-British India and which were a most important source of social mobility for individuals as well as groups. During the 19 century the British slowly laid the foundations of a modern state by surveying land, settling the revenue, creating modern bureaucracy army and Police instituting law courts,......

Words: 4696 - Pages: 19

Public Administration

...out certain principles, namely some that originated in the value systems of an orderly society, some outlined by legal rules, some derived from the Constitution of the Republic of South Africa 108 of 1996 and others from society’s value system; the “Batho Pele” principles (meaning People First). All these policies put together constitute to the Value of Society in public administration. According to Fox & Meyer (1995:134), the word value is defined as the concept of what is fundamentally good or desirable that an individual holds on to as a guide through life. As a result, people live by principles as a means of living accordingly to their particular convictions. These principles serve as guidelines for individuals and for government instiutions so that government insitutions can achieve their objectives. Principles also exist so that government institutuions and individuals that vote for a particular government institution can co-exist in respect to one another and so that these institutions can represent the society's interest at heart with due respect to these principles. Amid the many that exist, Heyns (1986:98 -127) and Cloete (1997:70-74) refer to and discuss some few normative values (Normative meaning deriving from a standard or norm). These are just some of the principles that arise from the community - Reasonableness and fairness; Balance; Truth; Thoroughness; Efficiency and Religion. Here, Heyns and Cloete discuss the implications of these values and principles......

Words: 843 - Pages: 4

Federal and Inmate Comparison

...by double chain-link fencing and employ vehicle patrols around their perimeter with work programs in place. Maximum-security: Have strengthened perimeters, mostly cell-type housing, a wide variety of work and treatment programs. High-security: Also known as the United States Penitentiaries (USPs), these prisons are designed to prevent escapes and to contain disturbances. This type of prison will make use of armed patrols, and intense electronic surveillance. This type of prison may also have a lethal injection facility. Super-maximum-security: Also known as Administrative Maxium (ADMAX) and used for the worse offenders. The term used by the federal government to denote ultra high security prisons (Location,......

Words: 1194 - Pages: 5

Budget

...provide skill training to 1 lakh youth in next 5 years. Entire cost to be borne by Centre. SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS   Allocation under NSAP raised by 37 per cent to `8,447 crore in 2012-13. In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, pension amount to be raised from `200 to `300 per month. Lump sum grant on the death of primary breadwinner of a BPL family, in the age group 18-64 years, doubled to `20,000. To enhance access under SWAVALAMBAN scheme, LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators. Special grant provided to various universities and academic instiutions.    Security     A provision of `1,93,407 crore made for Defence services including `79,579 crore for capital expenditure. Any further requirement to be met. `1,185 crore proposed to be allocated for construction of nearly 4,000 residential quarters for Central Armed Police Forces. `3,280 crore proposed to be allocated for construction of office building of Central Armed Police Forces. Scheme to create National Population Register likely to be completed within next 2 years. 9 http://indiabudget.nic.in GOVERNANCE UID-Aadhaar  Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons. Black Money  Proposal to lay a White Paper......

Words: 4603 - Pages: 19

关于管理哲学

...关于管理哲学(A Philosophy of Management)一文的反思 关于管理方面的书籍可谓汗牛充栋,在这其中,戴维斯关于管理哲学的一文篇幅虽然不长,当中却涵盖了颇多引人深思的真知灼见。 在剑桥词典中,哲学被定义为对于特定学科理解方面的理论及观点(the philosophy of something: A group of theories and ideas related to the understanding of a particular subject); 管理则被定义为对于某物(某事)的组织与控制(management: the control and organization of something),由此可知,管理哲学是对如何对某物(某事)进行组织和控制的理论与观点,在戴维斯的文章中,某物(某事)可视为是某组织。对于什么是组织的管理,德鲁克(Peter F. Drucker)有过这样的定义:“我们可以通过管理任务来界定什么是管理,管理必须完成三项同等重要而又极其不同的任务:1组织结构的特定目的和使命;2使工作富有生产力并使员工有所成就;3管理组织结构的社会影响和社会责任。(First we have to define management in and through its tasks. There are three tasks, equally important but essentially different:1 the specific purpose and mission of the instiution;2 making work productive and the worker achieving;3 managing social impacts and social responsibilities)”不知是英雄所见略同,还是德鲁克借鉴了戴维斯的思想,德鲁克关于管理的定义与戴维斯这篇文章中的一些观点如出一辙。 在这面文章中,戴维斯共列出了十条原则:1. 相信管理的主要目标是为客户提供满意的服务,利润是必要的但却是附属的;2. 相信私有财产和自由竞争并且反对削弱自由市场体系的力量;3. 相信组织的所有者,管理者和执行者的利益必须从属于组织的主要服务目的;4. 相信推动技术进步和促进经济发展是组织的所有者及管理者的义务;5. 相信运用科学技术作为基础来分析解决生意上的问题的重要性;6. 相信刺激,奖励与惩戒对于激励经济增长的重要性;7. 相信对于领导管理方面的原则的持续学习的重要性;8. 相信高标准的道德是正确的生意关系的基础;9. 相信劳动者集体有讨价还价的权利;10. 相信保持个人主动性及行动自由的重要性。可以说每条原则展开后都是一篇大文章,这里仅就本人感兴趣的几条原则进行评述。 一.戴维斯提出了“利润是必要的但却是附属的”的观点,这与传统意义上常说的“厂商的目标就是追逐利润最大化”颇有不同。商人逐利,看似天经地义,实则不然,如果商人单纯的信奉利润最大化原则,则极为容易陷入到压榨商业链条的每一环节来提高自身利润的误区。对于上游供应商,这样的企业往往苛刻压价并尽最大限度的延迟还款;对于自身,这样的企业往往通过种种手段迫使员工从事高强度的工作以提高生产(服务)效率;对于下游消费者,这样的企业往往故弄玄虚,任意编造卖点来欺骗消费者;对于同行业者,这样的企业往往挥起价格战屠刀,必先除之而后快。即使在今天这样高度发达的商业环境中,上述现象依然屡见...

Words: 453 - Pages: 2