Making Sense of Institutions as a Factor Shaping Economic Performance

Abstract

There has recently been a resurgence of interest in how institutions affect economic performance. A review of this literature reveals that the concept of an "institution" means different things to different scholars, both within economics and across the social sciences. We discuss what factors unify the different definitions of institutions, and develop a concept of institutions useful for the analysis of economic performance, and economic growth in particular. Specifically, we develop the notion of institutions as standard "social technologies". Economic growth results from the co-evolution of physical and social technologies.

Keyword(s): Institutions, Economic growth, Evolutionary economics

JEL Classification: HO, LO, NO, O3