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Institutional Bottlenecks: What Can Be Done?

26 Pages Posted: 11 Dec 2012 Last revised: 13 Feb 2013

Christopher J. Coyne

George Mason University - Department of Economics

Abigail R. Hall

University of Tampa; George Mason University

Date Written: December 11, 2012

Abstract

Institutional bottlenecks refer to path-dependent institutional arrangements which contribute to economic stagnation. In his research, Timur Kuran identifies several historical institutional bottlenecks which contributed to economic decline and underdevelopment of the Middle East. We use Kuran’s research as springboard to ask: what can be done about institutional bottlenecks? To answer this question we draw on the work of F.A. Hayek who emphasized the centrality of institutions for social order and the limits on human reason in constructing a preferable state of affairs. We conclude that focus must be on the meta-rules through which the process of institutional evolution takes place. While we cannot know the specific outcomes of this evolutionary process ex ante, we can establish constraints to guide it. Reforms, therefore, should be focused on removing barriers to discovery instead of on selecting specific predefined end states.

Keywords: end-state reforms, Institutional bottlenecks, Middle East, unblocking reforms

JEL Classification: B52, B53, O10, O20

Suggested Citation

Coyne, Christopher J. and Hall, Abigail R., Institutional Bottlenecks: What Can Be Done? (December 11, 2012). Available at SSRN: https://ssrn.com/abstract=2188065 or http://dx.doi.org/10.2139/ssrn.2188065

Christopher J. Coyne (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Abigail R. Hall

University of Tampa ( email )

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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