🗓️ Session 6: Institutional Economics and Development II
Abstract
The session builds upon the previous theoretical introduction to institutional economics and focuses on the influential work of Acemoglu, Johnson, and Robinson (AJR) on colonial origins of comparative development. We analyze their argument that colonial institutions - whether “extractive” or “inclusive” - created path-dependent legacies that explain today’s global inequality. While examining the methodological innovations like instrumental variable estimation, we also critically assess the limitations of this approach, including its narrow definition of institutions, historical oversimplification, and potential ideological bias toward “Global Standard Institutions.”
🖥️ Lecture Slides
Either click on the slide area below or click here to download the slides.
📚 Mandatory Reading
🏆 Further Readings
- Acemoglu et al. (2001)
- Seminal paper on the colonial origins of comparative development, demonstrating how early institutions shaped long-term economic outcomes
✍️ Coursework
Evaluate Acemoglu, Johnson, and Robinson’s argument about colonial origins of development:
- Explain their distinction between “extractive” and “inclusive” institutions
- Assess their methodological approach (settler mortality as instrumental variable)
- Critically examine at least three limitations discussed in the lecture (narrow institutional definition, historical oversimplification, context-blindness, etc.)
- Consider alternative explanations for contemporary development differences
Exercise 3: The Development Puzzle (350 words)
Choose one of the country pairs mentioned in the “development puzzle” (North/South Korea, or find your own example of similar countries with different outcomes). Analyze:
- How would AJR’s institutional theory explain the differences?
- What factors might their approach overlook (power relations, ongoing exploitation, geopolitics)?
- How might an OIE perspective provide different insights?
If you have questions or problems, please post them in the Moodle forum.
🔗 Additional Resources
- World Bank Worldwide Governance Indicators: https://www.worldbank.org/en/publication/worldwide-governance-indicators
- Comprehensive database of institutional quality measures across countries
- Polity Project: https://www.systemicpeace.org/polityproject.html
- Data on political institutions and democratic governance