Theories of Institutional Change; Evolutionary and Deliberate Design

Abstract

Economists have a variety of definitions of institutions and a plethora of factors impacting and bringing about a change in them. Understanding of what brings about a change in institutions is very important from the point of view of economic development. The important question is notwhich institution is good or which is not for economic development but how to build such a good institution. For to know how to build an efficient institution (contextual as regards existing cultural norms, values and non encoded rules) it is extremely desirable to gain an insight into what brings about a change in them. This paper is an attempt to classify two such distinct strands of theories of institutional change: evolutionary theories and deliberate design theories.

Keywords: Institutional Change, Institutional Economics

JEL Classification: Z00, O00