Institutional Economics

Numerous theories have been constructed to provide reasons for economic growth differences between countries. As data became more readily available, cross-country empirical studies identified a set of variables that contributed to economic growth, including variables such as the investment in human and physical capital. Although most of the identified variables provide some support to economic growth, they still do not fully explain all growth differences. Furthermore, the analysis of these variables does not disclose, for instance, why two countries receiving the same amount of aid would spend it differently. The New Institutional Economics (NIE) accepts the importance of the variables identified, but extends the analysis of growth differences between countries to the link between policy choices and economic growth.

In the NIE literature it is widely accepted that policies should support the minimisation of transaction costs and the protection of property rights. It asks the question of what lies behind different policy decisions and explores why different countries take different routes to growth and development (or alternatively to economic stagnation). Policies originate as formal institutions, i.e. the "rules of the game". These formal institutions come into being due to various reasons and are mostly in support of groups in society that have the power to influence decision-making. Important also are the informal institutions, which encompass the culture, norms and codes of conduct that have been present for some time in the specific country. The effect of different existing informal institutions makes it impossible to duplicate formal institutions between countries and expect these formal institutions to lead to the same outcome.

Course instructor: Krige Siebrits

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Work programme (for Master's students)

Please note that this module is not presented every year, but in alternate years (the module is presented in 2018 and will be presented again in 2020). 

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BER Weekly

10 December
Dominating the domestic headlines last week was the news that South Africa exited a technical recession in 2018Q3. While this was widely expected, the pace of GDP growth surprised on the upside. More on this in the domestic section. After the release of some survey data for the fourth quarter (see domestic section for details), a spate of actual activity...

Read the full issue
 

Upcoming Seminars

No seminars are currently listed. Please check back soon.
 
More...

BER Weekly

10 December
Dominating the domestic headlines last week was the news that South Africa exited a technical recession in 2018Q3. While this was widely expected, the pace of GDP growth surprised on the upside. More on this in the domestic section. After the release of some survey data for the fourth quarter (see domestic section for details), a spate of actual activity...

Read the full issue