Institutions and Development: A View from Below

Abstract

Douglass North has defined an institution as “a set of rules, compliance procedures and moral and ethical behavioral norms designed to constrain the behavior of individuals in the interests of maximizing the wealth or utility of principals. More generally, institutions are made up of norms organized into a system, and both norms and institutions are of a symbolic and cultural nature. They are a part of the social order of society, they govern behavior and expectations of individuals, while at the same time regulating business operations and organizational ethics. They comprise the formal and informal rules within which people and organizations interact. Recent years have seen a remarkable and exciting revival of interest in the theoretical and empirical studies of how a broad set of institutions affects growth. The focus of recent research is on exploiting ‘cross-country’ variation in institutional quality to identify whether a causal effect runs from institutions to growth. This paper examines institutions and development from an African perspective, focusing on applicability of these concepts from below.