Institutional Economics, Development Economics and Labour Economics (The Distinguishedl Lecture)

Abstract

It seems to be quite fashionable for economists to be interested in institutions nowadays. At least, there is a growing interest among economists in the economic effects of institutions (reflected most obviously in the award of the 1991 Nobel Prize to Ronald Coase). And quite a few books on the economics of institutions have been coming out recently.! Sociologists are not impressed, of course. Institutions are and always have been central to much sociological theory. But for economists, an interest in institutions has in the past been off the mainstream. One reason may be that it is difficult to reach agreement on what institutions really represent, because there are so many ways and levels at which one can consider them. One definition is that "institutions are the humanly devised constraints that structure political, economic and social interaction" [North (1991)]. "Humanly devised" might seem too purposive for some tastes. Others refer to "rules of a society or of organisations that facilitate co-ordination among people by helping them form expectations which each person can reasonably hold in dealing with others" (Ruttan and Hayami); or "complexes of norms of behaviour that persist over time, by serving collectively valued purposes" (Uphoff) [both cited in Nabli and Nugent (l989a), p. 7].