Global Governance and Economic Development
Summary :
Table of Contents
- New institutional economics
- Case study: Eastern europe
- Social capital theory
- Case study: El Salvador
- New growth theory
- Case study: The Asian miracle
- Conclusion
- Works cited
Abstract
According to common perception among economists, the idea of institutional economics
started with Ronald Coarse's article, "The Nature of the Firm" (1937) where the concepts of
transaction costs and economic analysis were first introduced (Coarse, 1998, p. 71). Since then,
the field of New Institutional Economics (NIE) has come a long way and attracted more and
more prominent economists such as Oliver Williamson, Douglas North, Harold Demsetz, and
Steven Cheung as well an extensive array of representatives of various other social sciences such
as law, political science, sociology and anthropology. The need for a "new" way of thinking
about economics is what Oliver Williamson expressed by coining the phrase "new institutional
economics" in an attempt to distinguish the subject from "old institutional economics". The latter,
as Coarse states was "anti-theoretical" and without a theoretical background to explain facts, the
economists belonging to the "old" school of institutional economics were unable to bring the field
to the forefront of economic analysis (1998, p. 72). Hence, important conclusions about the role
of institutions, their origins, development and functioning, were slow to enter mainstream
economics, which according to the proponents of NIE, has a general disregard for the working of
real economies but rather focuses on the hypothetical situations (Coarse, 1998, p. 72).
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