An exploration of institutional approaches in pursuing sustainable development

Abstract

The institutional setting within which consumption and production occurs has profound influence on preferences and forms of production, and substantially shapes resource throughput of economies, pollution and land use. Institutional economics is arguably the most important subdiscipline of economics in enabling an inter-disciplinary and systems approach to ensure sustainable economy solutions. The purpose and academic contribution of the paper is to conduct the first systematic review of existing institutional economics frameworks that can be applied to explore sustainable development. The scientific value added of the review is to draw out, cluster, compare and contrast: the focus, contribution, use and institutional approaches of studies, as well as sector applicability, aims of sustainable development addressed and key gaps. Results show that most frameworks can be classed as applying new institutional economics approaches (or similar) and focus on common property or social ecological systems. Most of these frameworks see institutions as rules and often have a strong focus on formal rules. Another key finding is that most frameworks address the environmental aim of sustainable development, but few address all three aims. There was also found to be a lack of frameworks with a foreground focus on the end consumer and downstream supply chains that drive resources use and environmental impact. Classical institutional economics is largely neglected by most frameworks, yet classical institutional economics can inform the cultural shift to more sustainable economies, because of its focus on a wider range of informal institutions.