Institutions, Institutional Change and Economic Performance.
An analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies is developed in this analysis of economic structures.
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.
1. An introduction to institutions and institutional change
2. Cooperation: the theoretical problem
3. The behavioural assumptions in a theory of institutions
4. A transaction cost theory of exchange
5. Informal constraints
6. Formal constraints
8. Institutions and transaction and transformation costs
Part II. Institutional Change:
9. Organizations, learning, and institutional change
10. Stability and institutional change
11. The path of institutional change
Part III. Economic Performance:
12. Institutions, economic theory, and economic performance
13. Stablity and change in economic history
14. Incorporating institutional analysis into economic history: prospects and puzzles.