Institutional and Non-Institutional Explanations of Economic Differences

Stanley L. Engerman and Kenneth Sokoloff

No 9989, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Although we cannot conceive of processes of economic growth that do not involve institutional change, in this essay we outline some reasons why one should be cautious about grounding a theory of growth on institutions. We emphasize how very different institutional structures have often been found to be reasonable substitutes for each other, both in dissimilar as well as similar contexts. The historical record, therefore, does not seem to support the notion that any particular institution, narrowly defined, is indispensable for growth. Moreover, we discuss how the evidence that there are systematic patterns to the ways institutions evolve undercuts the idea that exogenous change in institutions is what powers growth. Institutions matter, but our thinking of how they matter should recognize that they are profoundly influenced by the political and economic environment, and that if any aspect of institutions is crucial for growth, it is that institutions change over time as circumstances change.

JEL-codes: N10 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-evo, nep-hpe, nep-lam and nep-pke
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Published as Menard, Claude and Mary M. Shirley. Handbook of New Institutional Economics. Dordrecht and New York: Springer, 2005.

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Chapter: Institutional and Non-Institutional Explanations of Economic Differences (2008)
Chapter: Institutional and Non-Institutional Explanations of Economic Differences (2005)
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