Informal Institutions

The Institutional Diagnostic Project case study on Bangladesh and Mozambique is an attempt to explain the paradox of sustainability of the former and the disappointed hopes of the growth of the latter.

This presentation reviews and summaries results from research done under RA4 research theme of our programme.

Outline of the presentation Objective, methodology and development of the project The synthesis volume and concluding chapters a) Identifying obstacles to development: economic perspective b) Identifying institutional obstacles: the role of politics c) Identifying institutional obstacles: state capacity and property…

Two central lessons can be drawn from the foregoing analysis. First, many institutional failures are traceable to the way politics functions. Therefore, any diagnosis or understanding of the impediments to a country’s long-term development that overlooks the country’s political economy…

After having examined the role of politics (in last chapter) in spurring or slowing down structural transformation and development, we are now ready to probe the issue of state capacity. This will complete our discussion of the role of governance-related…

In this chapter, the focus is on issues that involve politics. More specifically, we look at the role of political leadership and state autonomy in development. The institutions involved determine the quality of governance in a country, but they are…

Whether in the four case study countries or in the successful development stories of South Korea and Taiwan at the time when they were at a comparable level of income per capita, the issue of development consists of providing the…

This last part of the volume puts together the lessons learned from the in-depth case studies undertaken within the Institutional Diagnostic Programme (IDP), and the more cursory analysis of the success development stories of South Korea and Taiwan at about…

There are several reasons why development scholars should be interested in the case of Taiwan. As one author has written: ‘It once had a single dominant party following the Leninist model; it now has a competitive multiparty system. It was…

‘What would have been the conclusion of an institutional diagnostic of the development potential of South Korea conducted in the mid- or late-1970s, at a time when the country was still a low-income country, at roughly the same income level…

There are several reasons why Benin is an interesting country to study, and some of them have no doubt contributed to making it an aid darling for many donors. First, although it is made up of an extraordinarily varied mosaic…

At the core of the institutional diagnostic project is the idea that we can gain more knowledge about the role of institutions by undertaking in-depth country case studies than by carrying out broad quantitative exercises based on a large sample…

The preceding chapter defined the objective of the institutional diagnostics of each particular country and made explicit the concepts and analytical principles that need to be mobilised in order to conduct such an exercise. By providing a short description of…

The ‘institutions matter’ slogan appears today as a fundamental truth about development. Widely shared by the development community, including international organisations, it goes with the idea that the benefits of both market operations and state interventions are significantly conditioned by…

If there is absolutely no doubt that institutions matter for development, and for development policies and strategies in the first place, the crucial issue is knowing how they matter. After all, impressive economic development achievements have been observed despite the…

In developing countries with strongly patriarchal norms, the socio-economic opportunities and choices of adolescent girls and young women often lie in a contested area, subject to the influence of both traditional institutions and the modern state and its partners. While…

This synthesis paper draws together the salient elements emerging from the RA4 case studies research, and from three thematic synthesis papers written by members of the RA4 Scientific Committee, Jean Marie Baland and Catherine Guirkinger, Dilip Mookherjee, and Christopher Woodruff….

This paper serves as a companion paper to the Economic Development and Institutions’ (EDI) White Paper “At the Intersection: A Review of Institutions in Economic Development” (Dal Bó and Finan, 2016). The White Paper reviewed nearly 200 publications from economics…

Islamic countries have increasingly been exposed to western culture, through the liberalization of their media markets and rise of transnational media networks. What is the consequence of this exposure on cultural and religious behavior, given potential clashes between western norms…

We document the following dissimilarity between patterns of selection into entrepreneurship and into exporting among Chinese entrepreneurs. Birth counties with higher population density (PD) exhibited higher levels and growth of entrepreneurship, but a lower fraction of active entrepreneurs were engaged…

While political dynasties are pervasive across developing countries we have limited knowledge of their impact on economic development. We probe this in a context where electoral politics is both competitive and clientelist. Leveraging novel databases on political genealogies and local…

In this paper, we estimate the impact of dynastic families on local development in Pakistan’s largest province, Punjab. Toward this purpose,we compile an original database on political genealogies, which includes information aboutthe personal and family characteristics of both elected representatives…

We examine how trust shapes compliance with public health restrictions during the COVID-19 pandemic in Uganda. We use an endorsement experiment embedded in a mobile phone survey to show that messages from government officials generate more support for public health…

Throughout history, Rulers have always faced challenges to their rule. These challenges came either from outside aggressors, popular uprisings or Elite conspiracies. The ability of Rulers to respond to these challenges has varied a lot across countries and across time….

Studies examining expenditure policies of local governments (panchayats) in India have found evidence of failure to target benefits to poor regions or households. This mis-targeting can be either in the form of diversion to local elites, or forms of political…

Past research has provided evidence of clientelistic politics in delivery of program benefits by local governments (gram panchayats (GPs)), and manipulation of GP pro- gram budgets by legislators and elected officials at upper tiers in West Bengal, India. Using household…

Abstract: Historical narratives suggest that general differences exist in the power structure of society between Imperial China and Premodern Europe: the Ruler enjoyed a weaker absolute power in Europe, while in China the People were more on par with the…

Abstract: Gangs govern millions worldwide. Why rule, and how do they respond to states? Many argue that criminal rule provides protection when states do not, and that increasing state services could crowd gangs out. We began by interviewing leaders from…

Abstract: We investigate the historical origins of female genital cutting (FGC), a harmful practice widespread across Africa. We test the hypothesis -substantiated by historical sources – that FGC was connected to the Red Sea slave trade route, where women were…

Abstract: We study the role of traditional institutions of tribes and clans – large groups of people sharing an identity based on common lineage – in determining long-run differences in economic trajectories at sub-national level. Using a combination of rich…

Abstract: We study the long-run persistence of relative economic well-being in the face of highly adverse government policies using a combination of rich historical and contemporaneous data sources from Kyrgyzstan. Even after controlling for unobservable local effects, the economic well-being…

Abstract: In this study, we exploit a natural experiment to investigate the size and nature of the gender asset gap in Pakistan. In 2010, there was a massive flood, which affected nearly a fifth of the country, and caused a…

In developing countries with strongly patriarchal norms, the socio-economic opportunities and choices of adolescent girls and young women often lie in a contested area, subject to the influence of both traditional institutions and the modern state and its partners. While…

Since the COVID-19 outbreak, scholars and journalists have spread anecdotes of gangs and criminal organizations coming to the aid of citizens, governing in place of the state. They report gang activities that range from enforcing lockdowns to providing goods and…

Bangladesh Institutional Diagnostic Chapter 9: Institutional challenges in land administration and management in Bangladesh Chapter Overview List of tables and figures Glossary Introduction Consequences of land scarcity and inefficient land management Overview of the land laws and policies in Bangladesh…

Bangladesh Institutional Diagnostic Chapter 5: Informal institutions, the RMG sector, and the present challenge of export diversification in Bangladesh Chapter Overview List of tables, figures, and boxes Introduction Review of the literature on export diversification Overview of the RMG and…

Experimental Evidence from an Information Intervention in Bangladesh. As part of an EDI case study on early marriage in Bangladesh, we conducted a randomised information intervention in 80 villages following a recent change in child marriage law in the country….

In this research, we ask whether kinship networks help promote entrepreneurship or impede its development in the Kyrgyz Republic. We conducted a survey of firm managers/entrepreneurs about the nature of their business networks, what kinds of business and non-business resources…

The use of kinship networks by small business owners in the Kyrgyz Republic has both positive and negative effects on their companies’ profitability and revenue growth. In order to leverage these networks, technical advice to entrepreneurs should encourage discretion in…

The Judiciary, through providing protection of property rights, constraining government abuse, and enforcing contracts, plays a key role in institutional, political, and economic development. Religion, too, has largely influenced institutions, politics, and economic development. Yet not much is understood on…

The literature shows that women do not have an equal share in wealth as men, even within the same household, where large inequalities exist in ownership of land and productive assets. Women’s increased control of resources has been shown to…

We test the hypothesis that the slave trade was one of the contributing factors for the spread of female genital cutting (FGC). In the Red-Sea route female slaves were sold as concubines and infibulation was used to ensure chastity. We…

The design of development policies requires a precise understanding of the informal institutions regulating economic activities. A key – yet understudied – institution in many low- and middle-income countries is the clan. Catherine Guirkinger (University of Namur) discusses the economic…

This paper elucidates the willingness of an autocrat to push through institutional reforms in a context where traditional authorities represented by religious clerics are averse to them and where the military, who have their own preferences about reforms, control the…

Abstract: This paper investigates how social norms related to land conversion may evolve to accommodate greater scarcity, by taking advantage of data collected in the Equateur Province in the Democratic Republic of Congo as well as historical events that introduced…

This introductory chapter the the Benin Institutional Diagnostic provides a contextual overview to the publication under five main topics: ‘Institutions matter’ How institutions matter in development policy today Searching for evidence on the quality of institutions and development Institutional diagnostic…

Abstract: The negative welfare consequences of child marriage are well established, but the phenomenon is still ubiquitous in developing countries, where one in three girls is married before the age of 18. Although most countries have a legal minimum age of marriage…

This EDI Working Paper arises from the research undertaken for a case study on “Discretion versus rule-based budgeting and assignment in Indian governments“. The study shows how political support of household heads respond to receipt of different private and public good…

This EDI Policy Brief provides an accessible summary of key insights and findings that are presented in the EDI Working Paper on “Community Origins of Industrial Entrepreneurship in Pre-Independence India.” It derives from a case study on the role community networks in…

This EDI Working Paper derives from research undertaken in the Case Study on ‘Community networks and industrial entrepreneurship in India and China’ by Dilip Mookherjee et al. The authors argue that community networks played an important role in the emergence of…

This EDI Policy Brief provides an accessible summary of key insights and findings that are presented in the EDI Working Paper on “Community networks and the growth of private enterprise in China.” It derives from a case study on the…

Tanzania Institutional Diagnostic Chapter 1: Reflections on the political and economic development of Tanzania Chapter outline A short account of the political history of Tanzania The colonial era The German colonisation The British mandate on Tanganyika Independence Forging a nation: the…

François Bourguignon and Sam Wangwe provide an introduction to the analysis produced for the Tanzania Institutional Diagnostic. The authors outline three approaches have been developed to identify the institutional factors hindering development or ways of remedying specific factors: historical case studies;…

A presentation by Erica Field and Kate Vyborny This presentation was part of the convening event hosted by CEGA at the University of California, Berkeley, in August 2018. Read a summary of the event.

A presentation by Ernesto Dal Bó and Federico Finan, University of California, Berkeley This presentation was part of the convening event hosted by CEGA at the University of California, Berkeley, in August 2018. Read a summary of the event.  

“Improving the effectiveness of labor courts through information and conciliation” A presentation by Joyce Sadka, Enrique Seira and Chris Woodruff, Instituto Tecnológico Autónomo de México (ITAM) This presentation was part of the convening event hosted by CEGA at the University…

Female Employment and Aspirations for Children: Evidence from Bangladesh’s Garment Industry This EDI Policy Brief provides insight into gender roles and aspirations for children among a sample of families involved with the Bangladeshi garment industry. It is based upon an…

This policy brief reflects on the EDI Path-Finding Paper, “The dynamics of family systems: lessons from past and present time,” written by Catherine Guirkinger and Jean-Philippe Platteau. It exposes the main lessons from salient studies that have estimated the effects…

A Policy Brief Prepared for the World Bank’s 2017 Law, Justice and Development Week October 2017. Economic inequalities divide men and women around the world. Women on average earn just 60-70% of what their male counterparts earn. They are less likely to participate…

This brief, based on Klasen’s path-finding paper titled ‘Gender, Institutions and Economic Development: Findings, Open Research and Policy Issues’ focuses on the way he treats gender gaps as the outcome of institutional features, formal and informal.  And on how formal institutions, informal…

Market exchange involves many cognitive and non-cognitive processes, e.g., search, inference, prediction, negotiation. Much attention has been devoted to these issues both in theory and in experimental economics. I focus on the enforcement of market transactions against opportunistic behavior. I…

This paper presents a survey of the literature on culture in economics, emphasizing the effects of culture as well as the origins of cultural development. Research finds culture to have a large set of effects on economic behaviors, outcomes and …

This paper reviews the economic literature on how family systems respond to changes in resource endowments, outside economic opportunities, the development of markets, and surrounding institutions. On topics where economic contributions are scarce, we also provide insights from other disciplines,…

Institutions are commonly defined as the rules of the game that societies play which in shared understanding act as constraints on and guidelines for economic performance. This paper provides an overview of case studies from the two largest developing countries,…

This paper reviews and synthesizes current knowledge on the role of institutions on firm financing and growth in developing countries. First, the paper presents stylized facts on the different institutional constraints under which firms in developing countries operate. Next, the…

A large share of children in low income countries learn little and complete their primary education lacking even basic reading, writing and arithmetic skills. We review the experimental literature on teacher effort, knowledge, and skills – areas we argue are…

In this review, we examine the links between economic development and social conflict. By economic development, we refer broadly to aggregate changes in per-capita income and wealth, or in the distribution of that wealth. By social conflict, we refer to…

Gender relations are a key institution governing important aspects of production and reproduction of societies. They are guided by formal institutions as well as informal norms and values. As this survey shows, there is great regional heterogeneity in gender inequality…

Group inequality is a prominent feature of many modern democracies. The purpose of this paper is to take stock of what we know about the ways in which major democracies have viewed social groups and addressed inequalities between them. Countries…

This paper reviews the channels through which the media can be a tool of institutional development, building the argument in two parts. First I focus on the media as a tool for accountability: by providing information on candidates ex ante,…

Louis Kasekende (Deputy Governor, Bank of Uganda) discusses the role of formal and informal institutions in the financial sector. He refers to recent EDI path-finding research papers to focus on the transition from informal to formal institutions and its effect…

Sam Bowles of the Santa Fe Institute explains how institutions are the rules of the game, that regulate how we interact with each other. “If we don’t understand how institutions work, we can’t possibly understand how economies change,” he says….