Classical ideas of economics are largely spinning around on prices and output, supply and demand, and are substantially dismissive of institutions. Now, the new discipline insists that institutions matter and institutions are susceptible to economic analysis. It is now widely recognized that understanding on how institutions affect economic performance and why different institutional arrangements emerge in different social and cultural settings, is important. Its name and core ideas trace back to 1919 American Economic Review article by Walton H. Hamilton. A significant variant is The New Institutional Economics (NIE) from the later 20th century, which integrates later developments of neoclassical economics into the analysis. However, NIE departed from both mainstream Neoclassical economics and “old” institutional economics. NIE economists reversed the attempt by “old” institutional economists to use history and the study of institutions to explain economic behavior, instead using neoclassical economics to explain history, social relations, and the formation of institutions. NIE analysis considers aspects like financial and organizational arrangements, human capital, social capital, asymmetric information, strategic behavior, transaction costs, modes of governance, persuasive abilities, social norms, ideological values, decisive perceptions, gained control, enforcement mechanism, asset specificity, bounded rationality, migration, adverse selection, moral hazard, contractual safeguards, surrounding uncertainty, monitoring costs, incentives to scheme, hierarchical structures and bargaining strength.
- MIGRATION AND INSTITUTIONS
The Economics of Labor Migration: A Behavioral Analysis
Author:Charles F. Mueller
The Economics of Labor Migration: A Behavioral Analysis presents an in-depth study of the various factors and conditions that lead to a worker’s decision to migrate.The book applies theoretical and empirical procedures to the analysis and comprehension of the labor migration phenomenon. The text is organized in that the first chapter provides an introduction of the subject and an overview and outline of the study. Chapter 2 reviews previous studies on the determinants of interregional migration and geographic mobility. In Chapter 3, a theoretical behavioral model of the migration decision is developed. The judgments used in developing a data base suitable for estimation purposes and the aggregate characteristics of the sample of workers are presented in Chapter 4. The fifth chapter discusses the estimation results. Chapter 6 evaluates the data using collinearity diagnostics that identify sources of collinearity. The final chapter gives a summary of the study, recommendations for further research, and an assessment of the migration policy in the United States.
- INSTITUTIONS AND ECONOMIC DEVELOPMENT
Foundations of Institutional Economics
Editors: K William Kapp, Edited by Sebastian Berger and Rolf Steppacher
This is a ground-breaking book about the foundations of institutional economics. K. William Kapp presents the economic role of institutions for economic development, capital formation and technological dynamics in an easily accessible and comprehensive manner. As a front-rank 20th century institutional economist, Kapp pulls together arguments from a variety of sources, including Thorstein Veblen, John Kenneth Galbraith and Gunnar Myrdal, all of which emphasize the crucial role of institutions. The author cements institutional economics as a distinct and coherent framework of analysis to effectively address urgent socio-economic problems, such as environmental disruption and sustainable development.
This book begins with a critique of conventional (neoclassical) economics and an overview of the antecedents of institutional economics. The core of the book is formed by the chapters on institutions, human economic behavior and needs, arguing that institutional change is key to directing economic development towards sustainable and adequate living conditions, rather than merely formal growth formulas. The final chapters provide the reader with the institutional theories of capital and technology, showing how capital formation and technological dynamics are determined by institutions, such as the principle of investment for profit. The appendix complements Kappâe(tm)s plea for institutional change with articles on science and technology, social costs, substantive economics, and circular and cumulative causation.
This book is suited for readers at all levels who are interested in institutional economics, the history of economics thought, political economics as well as ecological and heterodox economics. Researchers and students will find it to be an easily accessible and a concise elaboration on the foundations of institutional economics.
- SOCIAL CAPITAL, HUMAN CAPITAL AND DEVELOPMENT
Social Capital, Human Capital and Economic Development: Theoretical Model and Empirical Analyses
Author: Youyou Baende Bofota
Researchers have mainly concentrated on traditional types of capital (natural, physical and human) in explaining the process of economic growth and development. Yet, it is now widely recognized that social capital is the missing link in this process. Social capital, as conceived by its promoters is intrinsically relational and can only exist within a pattern of relationships. The emphasis placed on social capital focuses on the way in which the economic actors interact and organize themselves to achieve goals. This thesis follows the literature on social capital. Specifically, this research is an exploration of the impact of social capital on socioeconomic outcomes such as education and economic growth. It is argued that, at the aggregate level, social capital impacts economic growth through its effect on human capital accumulation. Precisely, the interaction between social capital and human capital and their joint effects on economic growth is formalized in a multisector endogenous growth model. It is showed that, in contrast to existing alternative specifications, this setting assures that social capital enhances productivity gains by playing the role of a timing belt driving the transmission and propagation of all productivity shocks throughout the society whatever the sectoral origin of the shock.
At the individual level, we investigated whether social capital is an independent variable that explains educational outcomes of children in developing countries. Fixed effects and instrumental variable models have been used to address concerns about heterogeneity and endogeneity. The results suggest that social capital in the family contributes significantly to improve children educational attainment. Furthermore, the positive effects of social capital on education are not short lived, they last for the long term. The main contribution of this research is to provide a formal modelling of the important relationships between social capital human capital and economic growth. Another contribution is the extension of the empirical research on social capital effects on education in developing countries.
- FINANCIAL INSTITUTIONS, HUMAN CAPITAL AND DEVELOPMENT
Alternative Perspectives in Third-World Development: The Case of Malaysia
Author:Mohammad Anuar Adnan, Masudul Alam Choudhury, Uzir Abdul Malik
The Malaysian economy is developing fast within the context of increasing globalization. The book analyses in depth Malaysia’s policies aimed at promoting international trade, economic growth and social welfare. It also studies Malaysia’s position in the Southeast Asia region and in a global context. This analysis forms the basis for the formulation of an alternative development strategy, whose aim is producing a caring civil society and enhancing the general welfare of the population while developing the economy.