Limited Access Orders in the Developing World: A New Approach to the Problems of Development

50 Pages Posted: 20 Apr 2016

See all articles by Douglass C. North

Douglass C. North

Washington University in St. Louis - Department of Economics

John Joseph Wallis

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Steven B. Webb

World Bank - Economic Development Institute

Barry R. Weingast

Stanford University, Department of Political Science

Date Written: September 1, 2007

Abstract

The upper-income, advanced industrial countries of the world today all have market economies with open competition, competitive multi-party democratic political systems, and a secure government monopoly over violence. Such open access orders, however, are not the only norm and equilibrium type of society. The middle and low-income developing countries today, like all countries before about 1800, can be understood as limited access orders that maintain their equilibrium in a fundamentally different way. In limited access orders, the state does not have a secure monopoly on violence, and society organizes itself to control violence among the elite factions. A common feature of limited access orders is that political elites divide up control of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, the elite factions have incentives to be peaceable most of the time. Adequate stability of the rents and thus of the social order requires limiting access and competition-hence a social order with a fundamentally different logic than the open access order. This paper lays out such a framework and explores some of its implications for the problems of development today.

Keywords: Corporate Law, Labor Policies, Public Sector Corruption & Anticorruption Measures, E-Business, Disability

Suggested Citation

North, Douglass C. and Wallis, John J. and Webb, Steven Benjamin and Weingast, Barry R., Limited Access Orders in the Developing World: A New Approach to the Problems of Development (September 1, 2007). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1015978

Douglass C. North

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
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John J. Wallis

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3552 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Steven Benjamin Webb

World Bank - Economic Development Institute ( email )

1818 H Street
Washington, DC 20433
United States

Barry R. Weingast (Contact Author)

Stanford University, Department of Political Science ( email )

Stanford, CA 94305-6010
United States
650-723-0497 (Phone)
650-723-1808 (Fax)

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