The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Economic Governance

  • Avinash K. Dixit
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2611

Abstract

Economic governance consists of the processes that support economic activity and economic transactions by protecting property rights, enforcing contracts, and taking collective action to provide appropriate physical and organizational infrastructure. These processes are carried out within institutions, formal and informal. The field of economic governance studies and compares the performance of different institutions under different conditions, the evolution of these institutions, and the transitions from one set of institutions to another.

Keywords

Accountability Arbitration Authoritarianism and economic development Better Business Bureaus (USA) Coase, R. Colonization Commitment Common law vs civil law Common-pool resource management Corporate governance Corruption Corruption control Credit rating agencies Democracy and economic development Democracy: parliamentary vs presidential Discriminating alignment hypothesis Economic governance Electoral rules Ethnic trading networks Evolution of institutions Exploitation Formal vs informal (private) contract enforcement For-profit private institutions Governance Growth and governance Incentive compatibility Inequality Information verifiability Institutions and transition International contracts Mafia Market institutions Monitoring mechanisms Opportunism Political stability Prisoner’s Dilemma Property rights enforcement Regulatory burden Relation-based vs rule-based governance Reputation mechanisms Rule of law Slavery Social networks Social norms Subgame perfection Title registration Transaction cost economics Trust Voice World Bank World Trade Organization Yakuza 

JEL Classifications

D02 H11 K14 P26 P51 
This is a preview of subscription content, log in to check access.

Notes

Acknowledgments

I thank Tore Ellingsen, Diego Gambetta, Karla Hoff, Eva Meyersson-Milgrom, Dani Rodrik, Oliver Williamson, and the editors for comments on previous drafts, and the National Science Foundation for research support.

Bibliography

  1. Abreu, D. 1986. Extremal equilibria of oligopolistic supergames. Journal of Economic Theory 39: 191–225.CrossRefGoogle Scholar
  2. Acemoglu, D. 2003. Why not a political Coase Theorem? Social conflict, commitment and politics. Journal of Comparative Economics 31: 620–652.CrossRefGoogle Scholar
  3. Acemoglu, D., S. Johnson, and J. Robinson. 2001. The colonial origins of comparative development: An empirical investigation. American Economic Review 91: 1369–1401.CrossRefGoogle Scholar
  4. Acemoglu, D., S. Johnson, and J. Robinson. 2002. Reversal of fortune: Geography and institutions in the making of the modern world income distribution. Quarterly Journal of Economics 117: 1231–1294.CrossRefGoogle Scholar
  5. Acemoglu, D., and J. Robinson. 2005. Economic origins of dictatorship and democracy. New York: Cambridge University Press.CrossRefGoogle Scholar
  6. Bagwell, K., and R. Staiger. 2003. The economics of the world trading system. Cambridge, MA: MIT Press.Google Scholar
  7. Baker, G., R. Gibbons, and K. Murphy. 1994. Subjective performance measures in optimal incentive contracts. Quarterly Journal of Economics 109: 1125–1156.CrossRefGoogle Scholar
  8. Bandiera, O. 2003. Land reform, the market for protection and the origins of the Sicilian Mafia: Theory and evidence. Journal of Law, Economics, and Organization 19: 218–244.CrossRefGoogle Scholar
  9. Barro, R. 1999. Determinants of economic growth: A cross-country empirical study. Cambridge, MA: MIT Press.Google Scholar
  10. Bernstein, L. 1992. Opting out of the legal system: Extralegal contractual relations in the diamond industry. The Journal of Legal Studies 21: 115–157.CrossRefGoogle Scholar
  11. Calvert, R. 1995a. The rational choice theory of social institutions: Cooperation, communication, and coordination. In Modern political economy: Old topics, new directions, ed. J. Banks and E. Hanushek. Cambridge: Cambridge University Press.Google Scholar
  12. Calvert, R. 1995b. Rational actors, equilibrium, and social institutions. In Explaining social institutions, ed. J. Knight and I. Sened. Ann Arbor: University of Michigan Press.Google Scholar
  13. Casella, A., and J. Rauch. 2002. Anonymous market and group ties in international trade. Journal of International Economics 58: 19–47.CrossRefGoogle Scholar
  14. Coase, R. 1937. The nature of the firm. Economica 4: 386–406.CrossRefGoogle Scholar
  15. De Soto, H. 2000. Mystery of capital: Why capitalism triumphs in the west and fails everywhere else. New York: Basic Books.Google Scholar
  16. Dezalay, Y., and B. Garth. 1996. Dealing in virtue: International commercial arbitration and the construction of a transnational order. Chicago/London: University of Chicago Press.Google Scholar
  17. Dixit, A. 2004. Lawlessness and economics: Alternative modes of governance. Princeton: Princeton University Press.Google Scholar
  18. Dower, J. 1999. Embracing defeat: Japan in the wake of world war II. New York: W.W. Norton.Google Scholar
  19. Eggertson, T. 2005. Imperfect institutions: Possibilities and limits of reform. Ann Arbor: University of Michigan Press.CrossRefGoogle Scholar
  20. Engerman, S., and K. Sokoloff. 2002. Factor endowments, inequality, and paths of development among New World economies. Economia 3: 41–109.Google Scholar
  21. Ensminger, J. 1992. Making a market: The institutional transformation of an African society. New York: Cambridge University Press.Google Scholar
  22. Fafchamps, M. 2004. Market institutions in Sub-Saharan Africa: Theory and evidence. Cambridge, MA: MIT Press.Google Scholar
  23. Fehr, E., and S. Gächter. 2000. Cooperation and punishment in public goods experiments. American Economic Review 90: 980–994.CrossRefGoogle Scholar
  24. Gambetta, D. 1993. The Sicilian Mafia: The business of private protection. Cambridge, MA: Harvard University Press.Google Scholar
  25. Giavazzi, F., and G. Tabellini. 2005. Economic and political liberalizations. Journal of Monetary Economics 57: 1297–1330.CrossRefGoogle Scholar
  26. Glaeser, E., R. La Porta, F. Lopez-de-Silanes, and A. Shleifer. 2004. Do institutions cause growth? Journal of Economic Growth 9: 271–303.CrossRefGoogle Scholar
  27. Greif, A. 1993. Contract enforceability and economic institutions in early trade: The Maghribi traders’ coalition. American Economic Review 83: 525–548.Google Scholar
  28. Greif, A. 1994. Cultural beliefs and the organization of society: A historical and theoretical reflection on collectivist and individualist societies. Journal of Political Economy 102: 912–950.CrossRefGoogle Scholar
  29. Greif, A. 2006. Institutions and the path to the modern economy: Lessons from medieval trade. New York: Cambridge University Press.CrossRefGoogle Scholar
  30. Greif, A., P. Milgrom, and B. Weingast. 1994. Coordination, commitment, and enforcement: The case of the merchant guild. Journal of Political Economy 102: 745–776.CrossRefGoogle Scholar
  31. Hall, R., and C. Jones. 1999. Why do some countries produce so much more output than others? Quarterly Journal of Economics 114: 83–116.CrossRefGoogle Scholar
  32. Hoff, K. 2003. Paths of institutional development: A view from economic history. World Bank Research Observer 18: 205–226.CrossRefGoogle Scholar
  33. Johnson, S., J. McMillan, and C. Woodruff. 2002. Courts and relational contracts. Journal of Law, Economics, and Organization 18: 221–277.CrossRefGoogle Scholar
  34. Kaufman, D., A. Kraay, and M. Mastruzzi. 2005. Governance matters IV: Updated governance indicators 1996–2004. Washington, DC: World Bank research paper.CrossRefGoogle Scholar
  35. Online. Available at http://www.worldbank.org/wbi/governance/pubs/govmatters4.html. Accessed 20 Apr 2006.
  36. Keefer, P. 2004. What does political economy tell us about economic development – And vice versa? Annual Review of Political Science 7: 247–272.CrossRefGoogle Scholar
  37. Kranton, R. 1996. Reciprocal exchange: A self–sustaining system. American Economic Review 86: 830–851.Google Scholar
  38. La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 1998. Law and finance. Journal of Political Economy 106: 1113–1155.CrossRefGoogle Scholar
  39. La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. Vishny. 1999. The quality of government. Journal of Law, Economics, and Organization 15: 222–279.CrossRefGoogle Scholar
  40. Lamoreaux, N., and J.-L. Rosenthal. 2005. Legal regime and contractual flexibility: A comparison of business’s organizational choices in France and the United States during the era of industrialization. American Law and Economics Review 7: 28–61.CrossRefGoogle Scholar
  41. Li, J.S. 2003. Relation-based versus rule-based governance: An explanation of the East Asian miracle and Asian crisis. Review of International Economics 11: 651–673.CrossRefGoogle Scholar
  42. Macaulay, S. 1963. Non-contractual relationships in business: A preliminary study. American Sociological Review 28: 55–70.CrossRefGoogle Scholar
  43. Maggi, G. 1999. The role of multilateral institutions in international trade cooperation. American Economic Review 89: 190–214.CrossRefGoogle Scholar
  44. Mattli, W. 2001. Private justice in a global economy: From litigation to arbitration. International Organization 55: 919–947.CrossRefGoogle Scholar
  45. Milgrom, P., D. North, and B. Weingast. 1990. The role of institutions in the revival of trade: The law merchant, private judges, and the Champagne fairs. Economics and Politics 2: 1–23.CrossRefGoogle Scholar
  46. North, D. 1990. Institutions, institutional change, and economic performance. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  47. Ostrom, E. 1990. Governing the commons: The evolution of institutions for collective action. Cambridge/New York: Cambridge University Press.CrossRefGoogle Scholar
  48. Persson, T. 2005. Forms of democracy, policy, and economic development, Working Paper No. 11171. Cambridge, MA: NBER.CrossRefGoogle Scholar
  49. Rajan, R., and L. Zingales. 2003. The great reversals: The politics of financial development in the twentieth century. Journal of Financial Economics 69: 5–50.CrossRefGoogle Scholar
  50. Varese, F. 2001. The Russian Mafia: Private protection in a new market economy. Oxford: Oxford University Press.CrossRefGoogle Scholar
  51. Williamson, O. 1975. Markets and hierarchies: Analysis and antitrust implications. New York: Free Press.Google Scholar
  52. Williamson, O. 1995. The mechanisms of governance. New York: Oxford University Press.Google Scholar
  53. Williamson, O. 2005. The economics of governance. American Economic Review 95: 1–18.CrossRefGoogle Scholar
  54. World Bank Institute. Governance and anti-corruption. Online. Available at http://www.worldbank.org/wbi/governance. Accessed 20 Apr 2006.

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Avinash K. Dixit
    • 1
  1. 1.