The Ideological Roots of Institutional Change

42 Pages Posted: 1 May 2017

See all articles by Murat Iyigun

Murat Iyigun

University of Colorado at Boulder - Department of Economics; Harvard University - Center for International Development (CID); IZA Institute of Labor Economics

Jared Rubin

Chapman University - The George L. Argyros School of Business & Economics

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Abstract

Why do some societies fail to adopt more efficient institutions in response to changing economic conditions? And why do such conditions sometimes generate ideological backlashes and at other times lead to transformative sociopolitical movements? We propose an explanation that highlights the interplay – or lack thereof – between new technologies, ideologies, and institutions. When new technologies emerge, uncertainty results from a lack of understanding how the technology will fit with prevailing ideologies and institutions. This uncertainty discourages investment in institutions and the cultural capital necessary to take advantage of new technologies. Accordingly, increased uncertainty during times of rapid technological change may generate an ideological backlash that puts a higher premium on traditional values. We apply the theory to numerous historical episodes, including Ottoman reform initiatives, the Japanese Tokugawa reforms and Meiji Restoration, and the Tongzhi Restoration in Qing China.

Keywords: ideology, institutions, conservatism, beliefs, uncertainty, institutional change, technological change

JEL Classification: D02, N40, N70, O33, O38, O43, Z10

Suggested Citation

Iyigun, Murat F. and Rubin, Jared, The Ideological Roots of Institutional Change. IZA Discussion Paper No. 10703, Available at SSRN: https://ssrn.com/abstract=2960492

Murat F. Iyigun (Contact Author)

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-492-6653 (Phone)
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Harvard University - Center for International Development (CID) ( email )

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IZA Institute of Labor Economics

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Jared Rubin

Chapman University - The George L. Argyros School of Business & Economics ( email )

One University Drive
Orange, CA 92866
United States

HOME PAGE: http://www.jaredcrubin.com

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