Institutions, Institutional Change and Economic Performance

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Cambridge University Press, Oct 26, 1990 - Business & Economics - 152 pages
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Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time. Institutions exist, he argues, due to the uncertainties involved in human interaction; they are the constraints devised to structure that interaction. Yet, institutions vary widely in their consequences for economic performance; some economies develop institutions that produce growth and development, while others develop institutions that produce stagnation. North first explores the nature of institutions and explains the role of transaction and production costs in their development. The second part of the book deals with institutional change. Institutions create the incentive structure in an economy, and organizations will be created to take advantage of the opportunities provided within a given institutional framework. North argues that the kinds of skills and knowledge fostered by the structure of an economy will shape the direction of change and gradually alter the institutional framework. He then explains how institutional development may lead to a path-dependent pattern of development. In the final part of the book, North explains the implications of this analysis for economic theory and economic history. He indicates how institutional analysis must be incorporated into neo-classical theory and explores the potential for the construction of a dynamic theory of long-term economic change. Douglass C. North is Director of the Center of Political Economy and Professor of Economics and History at Washington University in St. Louis. He is a past president of the Economic History Association and Western Economics Association and a Fellow, American Academy of Arts and Sciences. He has written over sixty articles for a variety of journals and is the author of The Rise of the Western World: A New Economic History (CUP, 1973, with R.P. Thomas) and Structure and Change in Economic History (Norton, 1981). Professor North is included in Great Economists Since Keynes edited by M. Blaug (CUP, 1988 paperback ed.)
 

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User Review  - bdtrump - LibraryThing

North's work is of the utmost importance for Political Science students, particularly those in Global Politics and Comparative Politics. Though dense, North offers discussion on institutional change that all PoliSci students will be required to know and intrinsically understand. Read full review

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Contents

An introduction to institutions and institutional change
3
Cooperation the theoretical problem
11
The behavioral assumptions in a theory of institutions
17
A transaction cost theory of exchange
27
Informal constraints
36
Formal constraints
46
Enforcement
54
Institutions and transaction and transformation costs
61
Stability and institutional change
83
The path of institutional change
92
Economic performance
105
Institutions economic theory and economic performance
107
Stability and change in economic history
118
Incorporating institutional analysis into economic history prospects and puzzles
131
References
141
Index
147

Institutional change
71
Organizations learning and institutional change
73

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