Last modified: 2017-05-27
Abstract
Starting from the second half of the 20th century, New institutional economics became one of the most influent economic areas of enquiry through the seminal contributions of Coase, Williamson and North. As it recognizes the key role of institutions in economic analysis, traditionally literature defines this stream of research as a “renaissance” of old institutionalism developed between the 19th and the 20th century mainly through the works of Commons, Veblen, Ayres and Mitchell.
At the same time, several contributions show a strong incompatibility between the two research areas: new institutionalism includes institutions in the analysis as mere variables, devices used by individuals to reduce costs and increase efficiency; old institutionalism offers a deeper analysis of institutional framework. The latter approach takes into account the strong interdependence between individuals – which create and modify institutional rules - and institutions. By including social and cultural factors, this approach is able to explain the complex, evolutionary and cumulative character of economic processes.
This paper analyses the contributions offered by development economists to the study of institutions. In the mid of the 20th century they started to investigate the main reasons of economic backwardness and to study those processes promoting development in poor countries.
The reason that prompted this investigation is twofold.
First, as it emerges from some the seminal contributions of Lewis (1955), Rostow (1960) and Hirschman (1963), development economists offer an interesting analysis of the role played by institutions in the economic sphere, by preventing or fostering the launching and strengthening of the development processes.
Secondly, this paper shows the common features between the institutional analysis elaborated by development economists and that offered by old institutional economics. Such analytical convergence is not surprising if their respective main reason of inquiry is taken into account: both research areas originated from the necessity to study complex processes – the structural changes in many countries after the World Wars and the promotion of economic development in poor countries – where non-economic factors play a crucial role and a holistic and historical approach is needed.
Ultimately, the main goal of this work is to expand the framework for the study of institutions in the perspective of the history of ideas. We believe that the analytical contributions of development economists are in continuity with the old institutionalist approach and that their theoretical innovations have been underestimated both by subsequent institutional studies and by new development economics.