Many believe that economic development is primarily a function of
institutions that help societies reap potential gains from
interdependent actors. The norms, rules, and organizations that "govern"
transactions are meant to resolve the collective action problems at the
heart of economic development. Recognition that institutions are key to
economic growth and to the distribution of resources is reflected not
only in scholarly literature on property rights and public agencies, but
also in the advice of development agencies that encourage the
construction of pro-market institutions. Yet claims that "institutions
matter" begs an important question: Where do "good" institutions (those
that facilitate efficient and equitable outcomes) come from and why do
they evolve the way they do?
Explaining Institutional Innovation explores these issues, adopting
the argument that institutional innovation requires "tough times" during
which leaders see themselves as highly vulnerable to internal pressures
and external threats yet lack the means to address them. Analyzing
business associations and states in Latin America, private sector
organizations in China, the Office of the Historian of Havana, the
Association of Caribbean States, Caribbean universities, and sugar
industries in Southeast Asia, the contributors affirm the vulnerability
approach by demonstrating how various types of crises precede and
stimulate institutional changes. Also, by highlighting the impact of
such factors as more proximate political arrangements and structures of
elite political competition, contributors suggest further avenues for
institutional analyses.
