Institutions and Development: A Conceptual Reanalysis

This essay reviews the concept of "institutions" as used in the recent economic literatures on firms and national development and notes its limitations. An alternative framework is proposed that draws on classic and contemporary sociological theory to position the concept of institutions in relation to other basic elements of culture and social structure. The framework is used to analyze (1) the failure of attempts to transplant institutions of developed countries into the global South and (2) the dynamics of massive privatization in Mexico. The bearing of this framework on current institutional theories of social change is examined, leading to the identification of sources of change at different levels of causal significance and scope. This modified theory of change is applied to the longstanding demographic debates on historical and institutional determinants of fertility transitions. The bearing of the proposed "thick institutionalist" framework on social theory and future development policies is discussed. Copyright 2006 The Population Council, Inc..