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; contemporaneous cross-country analysis; and observable realities evaluated by randomised control trials. All of them have their drawbacks, however, and it is these limitations of the standard analysis of the relationship between institutional weaknesses and development that motivated the Economic Development and Institutions (EDI) research programme. The aim of EDI’s approach is to provide better methods and tools for dealing with all kinds of institutional obstacles to development and, in the first place, identifying them. Within the EDI research programme, the latter is more precisely the objective of the ‘institutional diagnostic’ research activity.
As they explain,
“The ‘institutional diagnostic’ research activity aims to develop tools that would permit the identification of major institutional obstacles to development in a specific country at a specific point of its development process, as well as possible lines of reform and the political economy issues associated with them. This is a country-centred approach that differs from the historical case studies mentioned above, in the sense that the focus is not on a particular event or episode in a country but on the overall functioning of its economy. It is not a straight application of the econometric approach because usual governance indicators used in cross-country analysis appear much too rough when dealing with a real economy.”
Authors: François Bourguignon, Paris School of Economics, and Samuel Wangwe, Economic and Social Research Foundation