Institutions and the Performance of Economies Over Time

Douglass C. North
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Douglass C. North: Washington University in St. Louis

Chapter 2 in Handbook of New Institutional Economics, 2025, pp 25-35 from Springer

Abstract: Abstract In this chapter, I intend to provide an approach to the study of the process of economic change. The discipline of economics is made up of a static body of theory that explores the efficiency of resource allocation at an instant of time and under the restrictive assumptions of frictionless markets. But the first constraint of static analysis severely hinders our ability to analyze and improve the performance of economies in a world of continuous change. There is still much that we do not understand about the process of economic change, but this chapter provides an analytical framework that does, I believe, highlight the problems that must be confronted in order to understand and improve economic performance. I first describe the intentional nature of human interaction in a world of pervasive uncertainty (Sect. 2) before going on to describe the process of economic change (Sect. 3). I conclude with drawing some implications from this approach to the process of change which highlights the lacunae in our understanding of this process (Sect. 4).

Keywords: Institutions; Institutional change; Economic change; Incentive structure; Path dependency; Belief systems; Norms (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-50810-3_2

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DOI: 10.1007/978-3-031-50810-3_2

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