Key Aspects of the New Institutional Economics (NIE)
This chapter will provide a background on the recent literature focusing on institutions as a factor behind economic success of countries, not only looking back in history but also in current policy discussions about sustained growth in developing countries, the recent post-communist transition, and also the current slow-growth problems of advanced countries like the US and Europe. Adducing the importance of good institutions goes well beyond the economic literature, and has become commonplace in other social sciences: political studies, sociology, and history. We will focus primarily on the work of economists, though many writings follow a political economy approach and sometimes overlap with other disciplines. This chapter does not purport to do a comprehensive survey of this literature, but only highlights its main points to give a selective resume of those aspects of the NIE most relevant to this book.1
KeywordsInstrumental Variable Institutional Quality Economic History Great Recession Legal Origin
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