Institutions, Economic Growth and Development: A ...

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17 • No. 4 • October – December 2016. Institutions, Economic Growth and. Development: A Conversation with. Nobel Laureate Douglass North. Brian Snowdon.
Institutions, Economic Growth and Development: A Conversation with Nobel Laureate Douglass North Brian Snowdon

Key Points 

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Introduction

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Pioneer of the ‘New Economic History’

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From the ‘New’ Economic History to the ‘New’ Institutional Economics

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Figure 1: Proximate and Fundamental Determinants of Growth

Economic Growth

Proximate Determinants: Physical and Human Capital, Labour, Total Factor Productivity

Fundamental Determinants

Formal Institutions: (Laws, Property Rights, Constitutions)

Informal Institutions: (Culture: Customs, Traditions, Codes of Conduct)

Geography

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Figure 2: North’s Transaction Costs Framework

Transaction Costs

Informal Institutions (culture) and Formal Institutions (e.g. rule of law) Economic Performance

Specialisation, Exchange and Trade

Productivity

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Dysfunctional equilibria: from closed to open access societies

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Figure 3: A Framework for Understanding Human History

Limited Access Orders with Extractive Institutions Fragile

Basic

Mature

History, Path Dependency, Beliefs and Culture

Doorstep Conditions

Open Access Orders with Inclusive Institutions

Uncertainty and Threat of Violence

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Back to the future

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An Interview with Douglass North Background information

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Early influences

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The ‘cliometric revolution’ and economic history

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The ‘New’ Institutional Economics, economic history and development

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Culture, geography and path dependency

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Interpreting history: limited access versus open access societies

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Future research

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