Economic Institutions and the State: Insights from Economic History

43 Pages Posted: 15 Nov 2012 Last revised: 14 Jan 2013

Multiple version iconThere are 2 versions of this paper

Date Written: December 20, 2012

Abstract

What mechanisms account for the long-run differences in economic development across historical settings? Current scholarship has renewed the argument that institutions are essential for promoting market transactions, industrialization, trade and economic growth. In particular, recent work in economic history offers valuable empirical and theoretical insights into the development of market-supporting institutions, their long-term consequences, and their relationship to state-building. The purpose of this chapter is to bring contributions in economic history to the attention of sociologists interested in the evolution of economic institutions. Drawing on salient historical cases, the chapter contrasts formal market-supporting institutions that are provided by the state with settings where such public provision fails and private-order institutions based on reputation effects within informal social networks offer an alternative. Moving beyond mere existence proofs that institutions matter, the review then discusses recent advances in understanding the precise mechanisms responsible for the persistent effects of institutions on economic development.

Keywords: Credible commitments, economic history, institutional mechanisms, private-order institutions

JEL Classification: D23, N20, N30, N40, N80, O10

Suggested Citation

Hillmann, Henning, Economic Institutions and the State: Insights from Economic History (December 20, 2012). Available at SSRN: https://ssrn.com/abstract=2175185 or http://dx.doi.org/10.2139/ssrn.2175185

Henning Hillmann (Contact Author)

University of Mannheim ( email )

A5, 6
Mannheim, Baden-Wuerttemberg D-68131
Germany

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