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UPSE DP 2008-06: Institutional Constraints on Philippine Growth

t is difficult in principle to controvert the simple statement that institutions play a role in explaining growth. An institution, after all, is “a system of rules, beliefs, norms, and organizations that together generate a regularity of (social) behaviour” (Greif 2006:30). Viewed at this fundamental level, institutions are pervasive, and therefore, affect all behaviour manifesting any semblance of regularity, including behaviour by politicians, bureaucrats, and of the citizenry itself. In particular, to the extent that formal rules, informal norms, beliefs and convergent expectations, and organisations are implicated in the acquisition and exercise of political authority, then governance itself – understood as “the manner in which public officials and institutions acquire and exercise the authority to shape public policy and provide public goods and services” (World Bank 2007:i) – must be understood as being themselves institutional outcomes. This is straightforward, since the institutional elements just mentioned directly affect political behaviour. At the most formal and superficial level, constitutions and statutes place obvious limits to the mode of acquiring and exercising authority (e.g., elections, executivelegislative relations, etc.). In many instances, of course, behaviour will appear to deviate from or spill over the limits imposed by formal laws – a problem endemic to many developing countries – such as, when clientist or patriarchal relations swamp outwardly democratic processes. Closer analysis, however, will typically reveal that such behaviour2 actually accords with some other (perhaps competing) set of de facto institutions that operate alongside or in lieu of de jure institutions. In the event, institutions of one form or another are implicated. The term political economy is taken here to mean the analysis of the effects of political constraints on economic policies and economic outcomes (Drazen 2000:7): “Political constraints” itself is shorthand for conflicting or heterogeneous interests, since upon closer consideration, complete homogeneity of interests would imply an almost axiomatic absence of conflict. Viewed from this aspect, the content of policies themselves assumes second-order importance, since whether or not policies are taken and the degree to which they are implemented become matters that are endogenous to prevailing institutions and political economy. But although definitions of institutions and their pervasiveness appear unexceptionable, it is less clear exactly what kinds of institutions do matter for economic performance, how their effects are transmitted, and how they may be changed.

UP-School of Economics
Authors Keywords
De Dios, Emmanuel S.; institutions and development;
Download PDF Number of Downloads
Published in 2008 and available in the UPSE Library or Downloaded 279 times since November 25, 2011
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