01 February 2011

One Rule to Rule Them All

Ranil makes the important point that whilst we may be good at describing good institutions ex post, we ain’t so good ex ante.
the reality of how rules emerge and are enforced is far more complex than Romer and many advocates of good governance and institutional approaches to economics recognise. I’ve seen a lot of people write some variation of ‘we know what good rules are’ or ‘we have a good understanding of what institutions stimulate development’. Despite this, I’ve never seen anyone actually set down on paper exactly what the correct legal framework and institutional makeup for development is. If we really did know what worked, surly someone would have written a fairly uncontroversial but best-selling book about this, right?
Here’s the thing – we don’t need to set out the exact legal framework because as Rodrik has said, we have the “meta-institution” of democracy. I’m going to go out on a wild limb and make a universal prescription: constraints on the executive, an electorally accountable legislative, and rights and protections for individuals and minorities are always and everywhere good things.
Trouble is, as the Egyptians are ably demonstrating, and in the words of Claude Ake (via Cblatts),
Democracy is never given, it is always taken.”


Unknown said...

I think that is exactly right. And we may already have those books that he says are lacking in BdM et al's (2003) "Logic of Political Survival" and Robert Bates's "Prosperity and Violence."

Lee said...

Both excellent books which I would highly recommend. Especially "Prosperity and Violence," which is short and readable.

Ranil Dissanayake said...

Hi Lee, a very good point - but the fact remains that very few countries were truly democratic at the time the institutional and legal structure that supported rapid growth emerges. Think US and in the 19th Century (extremely poor record of protecting minorities, in this case the indigenous inhabitants) or the UK in the 19th Century, or even the first half of the C20th (women not allowed to vote, property restrictions on voting rights).

It sounds like Democracy should choose the right rules, but historically, it's rarely been necessary.

Ranil Dissanayake said...

by the way - I think your list of things that are always and everywhere good are always and everywhere good, but should be promoted on their own virtues, not as motors for development.

Anonymous said...


Lee said...

Ranil - spot on - democracy IS development when we think of Sen's "Development as Freedom."

2nd - the historical record of development doesn't necessarily change our prescriptions for now.

China - you get your own post (up next)

Ryan said...

On the general institutions topic, this footnote from the most recent issue of Comparative Political Studies (article by Weymouth) is spot on:

Critiques of the institutionalist view usually come from two directions. One argues that institutions may be less important than the partisan interests of those with political power, who can bend institutions to their will (Gourevitch, 2006; Stasavage, 2002a). The second criticism involves the conventional research methodology, which typically employs subjective indicators of property rights protection produced by external ratings agencies or think tanks. Glaeser, La Porta, Lopez de Silanes, and Shleifer (2004) argue that these subjective empirical proxies for institutions confound institutions with policy choices and therefore cannot be used to explain economic outcomes. Despite their disagreements, however, institutionalists and their critics appear to agree on the primacy of property rights to economic outcomes; it is the determinants of the property rights regime that constitute the core of the debate. As Haggard et al. (2008) note,
"There seems to be a reasonably strong consensus that property rights matter, supported by both cross-national and survey work. But there is also concern that the security and enforcement of property rights might be wholly endogenous to some antecedent political conditions." (p. 209)

I think I can let this topic rest for a while now. Good posts Lee.

Lee said...

Property rights as the key also explains China, which is handy.

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