Institutions, Institutional Change and Economic Performance

159 Pages·1990·1.89 MB·English

by  Douglass C. North

Continuhiingsgr oundbreaaknianlgyo sfi s
economsitc:r uctuDroeusg,l aNsosr thhe re
develoapnas n alytfircaamle wofroker x ­
plaintihnewg rr ysi nw hicihn stituatnido ns
institucthiaonngael atfhfepe ecrtf ormaonfc e
economibeost,ah t a g jvetni maen do ver
timIen.s tituetxiioshntesa, r guedsu,et ot he
uncertaiinntvioelsiv neh du mani nteraction;
theayr et hec onstradienvtiss teosd t ructure
thaitn teracYettii onns.t ituvtairwoyin dse ilny
thec:iorn sequenfc:oeersc onomic perfor­
mances;o mee conomideesv elionps titutions
thaptr odugcrowte ha ndd evelopmwehnitl,e
otheerc onomideesv elionps titutthiaotn s
produsctea gnation.
Nortfhi resxtp lotrheens a tuorfei nstitutions
ande xplatihnreso loeft ransacatnidpo rno ­
ducticoons tisnt hedierv elopmTehnet .
seconpda rto ft heb ookd ealwsi tihn stitu­
tioncahla ngIen.s tituctrieoanttshe ei ncentive
structiunar nee conoma�n do rganizations
wilblec reatteotd a kaed vantaogfte h e
opportunpirtoiveisdw eidt haig ni veinn stitu­
tionfarla mewoNrokrt.ha rguetsh atth ek inds
ofs kiallnsdk nowledfgoes tebryet dh es truc­
turoefa ne conomwyi lslh apteh ed irectoifo n
changaen dg raduaallltyte hrei nstitutional
framewoHrekt .h eenx plahionwsi nstitutional
developmmerrnytl eatdoa p ath-dependent
patteorfdn e velopment.
Int hef inpaalr otft heb ookN,o rtehx plains
thiem plicatitohniassn aolfy fsoiersc onomic
theoarnyd e conomhiic:s toHreiy n.d icates
howi nstituatniaolnyamslui sstb ei ncorpo­
rateidn tnoe oclasstihceaoalrn yd e xplores
thep otentfiotarhl ec onstrucotfai on
dynamitch eoorfyl ong-teecromn omic
change.
INSTITUTIONISN,S TITUTIONACLH ANGE
AND ECONOMIC PERFORMANCE
THEP OLITICEACLO NOMYO PI NSTITUTIONS
ANDD ECISIONS
editors
JameAsl t, HaUrvnairvde rsity
DouglNaosrtsh Wa,s hingUtnoinv erisni LtSoytu .i s
Othbeoro iknst hsee ries
YoramB arzEec)o,n oAmniacl yofsP irosp erRtiygh ts
RobeHr.tB ateBse,y otnhdMe i raocftl heMe a rkTehte:
PolitEiccoanlo ofm Ayg rarDieavne lopinmK eennty a
Gary D.Th eCE offx,i cSieecnrtThe etC :a biannedt the
De11elopofmPo elnittP iacratliin Ve isc toErnigalna nd
Gary LiCboecnatpr,afo crtP irnogp eRrityg hts
MatthewM cDC.u bbainndTse r rSyu llievdasCn.o,,n gress:
StrucatnuPodrl ei cy
CharSlteesw arBtu dgReetfo rPoml itThiecD se:s iogfn
thAep prop1r1Pi1ra,ot ciieontsn hssHe o usoefR epresentatives,
z865-z9u
INSTITUTIONS,
INSTITUTIONALC HANGE
AND ECONOMIC
PERFORMANCE
DOUGLASSC .N ORTH
CAMBRIDGEU NIVERSITPYR ESS
Cambridge
NewYo rk PortCh esteMre lbouSrydnneey
Publisbheydt heP reSsysn dicoaftt eh eU niverosfiC tya mbridge
TheP ittB uildiTnrgu.m ping-cSotnr eeCta,m bridcgue rnr
40We st 10tSh1 �t,N ewY orkNY, IOOIIU,S A.
roS tamfoRroda dO,a kleiMgehl,b ourJnIe6 6A,u stralia
ClC ambridUgnei verPsrietys1 s99 0
Fimp ublis1h9e9d0
Printientd h eU nitSetda toefsA merica
Libraoryf C ongressCa talogil1g·in·PuDbaltiac atio11
Nonh,D ouglaCsesc il.
Institutiinosntsi,1 mcihoannagla en de conomic perfoIrm ance
DouglaCs.sN orth.
p. cm.- (ThPoel iti«coanlo myo fi nstituatnido ns
decisions)
Inclubdiebsl iograrpehfiecraeln ces.
ISB0N- 52.1-394136.- -SBIN0 -521-3973-40 (pb)k .
l.I nsrirurieocnoanlo mic:z.s.O. r ganizaticohnaanlg e.
3.E conomdiecv elopmeJn.Tt i.d e.I IS.e ries.
HB99-S-N6179 90
301.3'-5d c:z.o 90-1673
BritisLhi braCrya talog1i1nPi unbgl icaDtaitoan
Nonh,D ougasls C.( DouglCaescsi l)
Institutiionnsst,i tucthiaonngaaeln de conomic
perforamnce-.( Politiceaclo nomoyfi nstituatnido ns
decisions).
1.E conomics. Theories
I.T itIlIeS. eries
no.155
ISBoN- p1-39416-h3a rdback
ISBNo -su-39734-p0a perback
Contents
Sereideist porerfa'sc e pagvei
Preface vii
PartI nIs titutions
x Ani ntrodutcoit nisotni tauntdii nosntsi tcuhtainognea l
2. TChoeob peehraavttiahiotseorhs naeu:lom rpetipriinraco ot anbhlsel oeormfiy n stitutionx1s 7 1
4 A transaccotsito nt ohfee xocrhya nge 2.7
·6. ISFonr mfoarclmco aonlns stnraaiinnttss 4366
7 Enforcement 54
t8I nstitauntdtir oannss aacntdti roann sformcaotsitosn 61
ParJtI I nstitcuhtainognea l
Organizalteiaornnasin,ndi g n,s titcuhtainognea l 73
9 Stabialnidit nys titcuhtainognea l 83
Thep atohfi nstitcuhtainognea l 9•
ParItl lE conopmeircf ormance
Instituectoinoontmshi,ec o arnyde, c onopmeircfo rmanc1e0 7
1143 SI tncaobriaplnoidcirt hnayast ntiiginneetg c au ontnaiolohmyniisascilt sor iyn htios teocroIyn x:o8 m ic
prospaencdpt usz zles 131
References 141
Index 147
Sereideist porre'fsa ce
TheC ambriSdegreii ents hPo el itEiccoanlo omfIy n stitauntdDi eocnis­
sioinsbs u ilt aattreomupnttdoas n swtewroc entqruaels tiHoownd so:
institeuvtoiliovnnres e spotnois ned iviidnucaeln tives,a nsdt rategies,
choicaensdh, o wd oi nstitauffetcittoh npese f rormaonfcp eo litaincda l
econosmyisct eTmhses? c oopfet hsee riisce osm paraatnidhv ies torical
rathtehrai nn ternaotrsi poencailf Aimcearlilcayan ndt, hfo ec uissp os­
itirvaet htehran no rmative.
Int hcihsa lletnhgeionrgew toirckDa,ol u glNaosrste hx amihnoewts o
expltahivena stdliyffe rent peroffeo cromnaonmcoievesels ro npge riods
oft imAes.k i"nWgh acto mbinaofti inosnt itbuetspiteo rnmsci atpst uring
thgea ifnrso tmr adhee?o "ff,e arb sr opaedr speocnht oiwvi en stitutions
persainsdct h ansguep,e rsheidosiw nneg a rlwioerrok n incetnot­ives
waredff iciinesntt itNuotwih oinfossc .uis so n tihnet eraocfit nisotni tu­
tiodnesf,i ansae ndy conhsutmraadniesnv tit sose h atphee iinrc eractions,
anodr ganizcarteiaottnotes ad,ka ed vanotfat ghoeep portupnrietsieenst ­
edb yi nstitiunst hiaopntishn dege velopomfee cnotn omTiheeis m.p or­
tanocfei nstitaurtiifsorenostsm h ceo stloifmn eeasssu rinigsv a wlhua­t
ablper,o tecrtiignhagtn sdp, o licainndeg n foracgirnege meOnntcse.
creaitnesdt,i tduettieorntmshic eno es otfas c tiinnvg a riwoauysis np olit­
icaalnd e conocmoinct eNxotrsta.hp plhiietssh eoroift ehsie n terplay
betweienns titeuvtoilounatanildpo onl itaincdea clo noomrigca nization
toa r anogfeh istoerxiacmaplil necsl,u tdhidene gv elopomfme annta ge­
menstt ructluarwme esr,c hainntssu,r aanncdfe i,n ancialT hmea rkets.
synthheeas cihsi ewvielbslee quavlallyu atbol es tuodfee cnotnso mics,
histaonrydp, o litics.
Preef ac
Histmoartyt eIrtms a.t tneorjtsu bsetc awuesc ea ln eafrrno tmh e past,
bubte catuhspeer esaenndtt h feu tuarrceeo nnecttoe dpt haesb tyt he
continoufa is toyc ieitnys'tsi tTuodtaiyoa'nnssdt . o morrcohwo'sisa c ree
shapbeytd h pea sAtn.dt hpea sctao nn lbyem adien telalsias g tioborlfye
instiatleu vtoilountInitoeng.r iantsitnigti untteioco onnso tmhieco arnyd
econohmiisct ioasrn ey s sensttieiapnil m protvhianttgh eoarnyhd i story.
Thisst updryo vitdheoesu tloifn teah eoorfiy n stitauntdii nosntsi tu­
tiocnhaaln Aglet.h oiubtgu hi olndt she ea rlsiteurdo ifie nss titutions that
havbee etnh feo coufsm ya ttenftoitroh npe a sttw enyteya ristd,e lves
mucmho rdee eptlhyat nh eea rlsiteurdi inetthsoe n atuorfpe o litaincda l
econoimnisct itauntdhio own st chheayn Tghees. p ecifiocfea xtaicotnl y
whaitn stitaurtehi,oo wnt she dyi ffferro omr ganizaantdhi oownt sh,e y
influternacnes aacntdip roond ucctoisoitnsst hkee yt om ucho ft he
analysis.
Thec entfroacliu ossn t hper oblofeh mu macno oper-astpieocni fical­
lyt hceo opercahtapiteo rnm eictosn omtioce asp ttuhrgeea ifnrso tmr ade
thawte rteh kee ty oA damS mitWhe'asl otfNh a tioThnese v.o luotfi on
instittuhtacitro enaastn he o spiteanbvlier onfmoecrno to persaotliuv­e
tiotnocs o mpleexxc hange provides fNoorta elhcluo mnaonm ic growth.
cooperiasts ioocnip arloldyu cotfci ovuer,s e; tihnisdste ueiddscy, o n­
cernaesmd u ch weixtphl aithneeiv nogl uotfii nosnt itfurtaimoenwaolr ks
thaitn duecceo nosmtiacg naatniddo enc laiswn iet ahc counfotrit nhge
successes.
Myp rimaorbyj ecittsio cv oen starw uacyot fa pproatchhieis nsg-u es
an ecesfsiarrsstyte i pne volvait nhego orfiy n stitcuhtainoTgnheae.lr e­
formeu,c ohft hbeo okid se vottoed de velotphaienn agl yftriacmaelw ork.
Theh istIoi rnyc liusid lel ustdreastiigtvnoese ,hdo twh per omiofst eh e
approbacufhta, fr r opmr ovifdoitrnh gke i nodfh ypothteessittsih nagt
musutl timbaetd eolnyAe l.t homuygp hr immaersys aigtseo e conomists
vii
Preface
and ecohniosmtiocr biealniste,hva eer gumweinlbtle e quailnltye rest­
intgo ostohcesirca ile ln Wtiitsthth sii.nsm indh,a vaet temtpotk eede p
theec onotmeircm intool omgaiy n imaunmdm l a kteh aen alcylseitaso r
thneo neconomist.
Som anpye ophlaev pel ayae rdo lient hdee velopomfte hnietd eas
presenttehdai tthd eiirffsei tcouk nlotww h ereb etgoii nan c knowledging
theTmh.ef irsto ftd hrmiaasfn tu scwraisp tw rwihtitlewena s af ellaotw
l
thCee ntfeorAr d vanScteud dinyt he BehSacviieonrsaculep sp orbtye d
Gran#t B NS8 70048 o6ft hNea tioSncaile Fonucned atiGoanr.d ner
LlndzBeoybS, c otatn,dt hset aeffs tablaiw sohnedde rfhuolslpyi table
environfomrte hneitns t erpIower isap ea.r tidceublttaoC r a rBoalx ter,
whop atieinntdloyc trmieni antteeond o uogfth h mey steorfti heceso m­
putteora ltfeurn damen(tfaotlrhbl eey t tmeyrw )a yo fw ritiRnogb.e rt
KeohaSntee,v Kerna snMearr,kM achiannadK, e nS okolfoeffl,l aotw s
the Cetnhtayeter a arl,cl o ntritbou tetdhdee v elopomfte hnistst udy.
diIos wcesu mpsaesncedoyidef a tb ltht oiesB d aerdaWeresiyv n eglaaohsnpetJder o deah iNnnnydw e h,or ewwahiadotn mhIdch oamv­e
menteexdt ensoinsv eevleydr raalfo tfts h isst udy.
Whilwea sw rittihnimgsa nuscrwiapsrt e,a ddirnagfo tfTs h rainn
EggerIt sesxocne'lsslu ernvotef ny e oiIn stietcuotnioomnEiacclos n, omic
BehavainIodnr s tit(uCtaimbornUisnd igvee rsi1ty99 0P)Hr.iess st su,d y
clarimfyit ehdi nkoinnm ga nyi ssuaensdc ontritbous rheadp itnhge
direcotfmi yoo nw nw ork.
Othceorl leaatgWa usehsi ngUtnoinv e-rLseiBet eyn haAmr,Dt e nzau,
JohDnr obaGka,rM yi llaenrdN, o rmaSnc hof-iaellrlde aadne arlier
draafntdo fferevda luasbulgeg esOttihoenwrshs.or eaadne arldirearf t
and provvaildueacdbo lmem ents weArletR ,oJ baemrets RBoabteerst,
EllicSktsaonnEl,ne gye rmPahni,Hl oiffpm an,M aarngda LreevtHi o.w ­
evemry, d ebgtosf abre yond thoset hwmeha on ursecaIrdh i apvte.
presepnatreotdfts h sitsu adtyc o nferaennduc neisv ecrosliltoyoq vueira
the past halfa ndrd eoczeenim vaenydyve aarlsu asbulgeg estthiaotn s
havseh apmeydr esearch agenda,
RueHyu aL iua,n dp articWeurlnaerTrlro ye skaenndB raHda nsen
havbee edni liagnedtn rtu stwroerstehayar scshi sAtnannettMsti.el ford
halsa boreda nldho anrogdv edrr afotft sh imsa nuscript.
Lasbtu cte rtanionltle yaE slti,s aCbaeshteah s tramnysi lnaetleedg ant
proisnet tohE en glliasnhg uMaogrete.h atnh asth,he a s bornmee with
through dejiencstpiiornaa stt ahinisodstn u hdayes v olved.
BenioMniicah,i gan
January
I990