Institutional and Non-Institutional Explanations of Economic Differences

46 Pages Posted: 28 Sep 2003 Last revised: 19 Sep 2009

See all articles by Stanley L. Engerman

Stanley L. Engerman

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

Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2003

Abstract

Although we cannot conceive of processes of economic growth that do not involve institutional change, in this essay we outline some reasons why one should be cautious about grounding a theory of growth on institutions. We emphasize how very different institutional structures have often been found to be reasonable substitutes for each other, both in dissimilar as well as similar contexts. The historical record, therefore, does not seem to support the notion that any particular institution, narrowly defined, is indispensable for growth. Moreover, we discuss how the evidence that there are systematic patterns to the ways institutions evolve undercuts the idea that exogenous change in institutions is what powers growth. Institutions matter, but our thinking of how they matter should recognize that they are profoundly influenced by the political and economic environment, and that if any aspect of institutions is crucial for growth, it is that institutions change over time as circumstances change.

Suggested Citation

Engerman, Stanley L. and Sokoloff, Kenneth L., Institutional and Non-Institutional Explanations of Economic Differences (September 2003). NBER Working Paper No. w9989. Available at SSRN: https://ssrn.com/abstract=450890

Stanley L. Engerman (Contact Author)

University of Rochester - Department of Economics ( email )

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Rochester, NY 14627-0158
United States
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National Bureau of Economic Research (NBER)

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Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States
310-825-4249,310-825-1011 (Phone)
310-825-9528 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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