Abstract
ABSTRACT With the demise of development economics in the 1970s, the academic discipline of economics had little specific theorizing on development to offer practioners and proffered instead universal, liberal nostrums of free trade and free markets (Wing, 1990). These universal prescriptions evolved into the first catalogued Washington consensus in the 1980s on the urgency of market-oriented reforms in developing countries (Williamson, 1990). In the 1990s, a new connection formed between an emerging institutionalist subfield in economics and the next consensus in Washington after the first generation of market-oriented reforms. The opening of the third annual meetings of the International Society for New Institutional Economics (ISNIE) at World Bank headquarters in Washington, D.C. in September 1999 symbolized this new connection.
Highlights
With the demise of development economics in the 1970s, the academic discipline of economics had little specific theorizing on development to offer practioners and proffered instead universal, liberal nostrums of free trade and free markets (Wing, 1990)
The convergence of the New Institutional Economics (NIE) and thinking at multilateral development banks began as disconnected, independent trends
We argue that the NIE is helpful in shedding light on the nature of these problems and on potential institutional solutions
Summary
Brazilian Journal of Political Economy 20 (3), 2000 pp. 229-252 to result in attention to a ubiquitous, meso “institution” in developing countries – namely, business associations ( known as employers’ associations or trade associations, or business interest associations). 229-252 in much NIE work on business associations is that they represent interests and are part of the problem requiring some institutional reform in or by the state In one of his last publications, on the topic of collective action and development, Olson claimed that the incentives facing special interest groups were the same as those for bandits (1997). In principle, such responsibility is guaranteed by a series of institutionalized rules, including protection of shareholders rights (especially small shareholders), access to accurate and timely information, and the independence of the corporate board.18 These issues seem eminently susceptible to analysis using elements from the NIE toolkit (principal-agent relations, information asymmetries, and transaction and information costs) yet banking crises in Asia and other developing countries revealed how incipient our understanding of corporate governance in developing countries is.. 18 For a review of these issues, see Duenden and Somkiat (1999)
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