NIE and Development Theory.docx

NIE and Development Theory.docx

《NIE and Development Theory.docx》由会员分享，可在线阅读，更多相关《NIE and Development Theory.docx（9页珍藏版）》请在冰豆网上搜索。

NIEandDevelopmentTheory

TheNewInstitutionalEconomicsandDevelopmentTheory:

ABriefCriticalAssessment

PRANABBARDHAN

UniversityofCalifornia,Berkeley

Summary.–Inthispaperwediscussstrengthsandweaknessesoftransaction-costandimperfect-informationapproachestotheeconomictheoryofinstitutions,particularlywithreferencestoproblemsrelevanttoeconomicdevelopment.

1.ALTERNATIVETHEORLES

Inrecentyearstwostrandsofnon–Walrasianeconomicliteraturehavedevelopedwell-articulatedendogenoustheoriesofinstitutions,andtheyarebothgettingtobeprominentinthenewmicroeconomicsofdevelopmentOneisthetransactioncostschoolflowingoutofthefamouspaperbyCoase（1960）,followedbythewritingsofAlchian,Demsetz,Williamson,Northandothers;theotherschoolisassociatedwiththetheoryofimperfectinformationasintheworkofAkerlof,Stiglitz,Spenceandothers.Althoughthereissomefamilyresemblancebetweenthetwostrands,thereareimportantdifferencesintheirpointsofemphasis.Buttheybothdenythevalidityofsomeoftheprincipal–resultsofmainstreameconomics.Forexample,oneofthemainpillarsofWalrasianneoclassicaleconomicstheseparabilityofequityandefficiency---breaksdownwhentransactioncostsandefficiency;thetermsandconditionsofcontractsinvarioustransactions,whichdirectlyaffecttheefficiencyofresourceallocation,nowcruciallydependonownershipstructuresandpropertyrelations.Developmenteconomics,whichdealswithcaseswheremarketfailureandincompletemarkets（oftentheresultofthesubstantivepresenceoftransactioncostsandinformationproblems）arepredominant,clearlyprovideshospitableterritoryforsuchinstitutionalanalysis.

Accordingtothetransactioncostsschool,institutionsthatevolvetolowerthesecostsarethekeytotheperformanceofeconomies.Thesecostsincludethoseofinformation,negotiation,negotiation,monitoring,coordinationandenforcementofcontracts.Whentransactioncostsareabsent,theinitialassignmentofpropertyrightsdoesnotmatterfromthepointofviewofefficiency,becauserightscanbevoluntarilyadjustedandexchangedtopromoteincreasedproduction.Butwhentransactioncostsaresubstantial,asisusuallythecase,theallocationofpropertyrightsiscritical.Inthehistoricalgrowthprocessthereisatradeoffbetweeneconomiesofscaleandspecializationontheonehandandtransactioncostsontheother.Inasmall,closed,face-to-facepeasantcommunity,forexample,transactioncostsarelow,buttheproductioncostsarehigh,becausespecializationanddivisionoflaborareseverelylimitedbytheextentofmarketdefinedbythepersonalizedexchangeprocessofthesmallcommunity.Inalarge-scalecomplexeconomy,asthenetworkofinterdependencewidenstheimpersonalexchangeprocessgivesconsiderablescopeforallkindsofopportunisticbehavior（cheating,shirking,moralhazard）andthecostsoftransactingcanbehigh.InWesternsocietiesovertime,complexinstitutionalstructureshavebeendevised（elaboratelydefinedandeffectivelyenforcedpropertyrights,formalcontractsandguarantees,corporatehierarchy,verticalintegration,limitedliability,bankruptcylawsandsoon）toconstraintheparticipants,toreducetheuncertaintyofsocialinteraction,ingeneraltopreventthetransactionsfrombeingtoocostlyandthustoallowtheproductivitygainsoflargerscaleandimprovedtechnologytoberealized.NorthandThomas（1973）haveexplainedeconomicgrowthofWesternEuropebetweenthe10thandthe18thcenturiesprimarilyintermsofinnovationsintheinstitutionalrulesthatgovernedpropertyrights.Inthisview,asinMarxisthistory,propertyrelationswhichweresociallyusefulatonetimebecome“fetters”onthefurtherdevelopmentoftheforcesofproduction,andanappropriateredefinitionofpropertyrightsbecomesnecessary.Newpropertyrightsemergethatallowanincreaseingainsfromtradebyeconomizingontransactioncosts（includinggainsfromnewproductionorearlierhightransactioncostsandtheconsequent“marketfailure”）.Northandmanyotherneoclassicalinstitutionaleconomistsbelievethatthebasicsourceofinstitutionalchangeisfundamentalandpersistentchangesinrelativeprices,whichleadoneofbothpartiesinatransactiontoperceivethattheycouldbebetteroffunderalternativecontractualandinstitutionalarrangements.Historically,populationchangeisjudgedtohavebeenthesinglemostimportantsourceofrelativepricechanges,thoughtechnologicalchange（includingthatinmilitarytechnology）andchangesinthecostsofinformationarealsodeemedasmajorsources.

Theimperfect-informationtheoryofinstitutionsiscloselyrelatedtothatoftransactioncosts,sinceinformationcostsconstituteanimportantpartoftransactioncosts.Buttheformertheoryisusuallycastinamorerigorousframeworkclearlyspellingoutassumptionsandequilibriumsolutionconcepts,drawingoutmorefullytheimplicationsofstrategicbehaviorunderasymmetricinformationandsharplydifferentiatingtheimpactofdifferenttypesofinformationproblems.Imperfect-informationtheoryyieldssomewhatmoreconcreteandspecificpredictionsaboutthedesignofcontracts,withmoreattentiontothedetailsoftermsandconditionsofvaryingcontractualarrangementsundervaryingcircumstances,thantheusualpresentationsoftransactioncosttheory.ExceptionsinthelatterareprovidedbyWilliamson’stheoryoftransaction-specificassetsandhistheoryofincompletecontractsasfurtherdevelopedbyHartandHolmstrom（1987）.Thelatterfocusonadaptivesequentialdecision-makingratherthanthecomprehensivecontingentclaimscontractsoftheimperfect-informationliterature.Theimperfect-informationtheoristsgivemoreemphasistoexantemechanismdesignincontractsandlesstomaladaptationcostsincurredwhentransactionsdriftoutofalignmentexpostinaworldofboundedrationalitywherecontractsarenecessarilyincomplete（i.e.cannotpossiblytakeintoaccountallcontingencies）.Inparticular,oncerelation-specificinvestments（i.e.wheretheinvestmentsthepartiesmakehaveamuchgreateruseinsidetherelationshipthanoutside）aremade,thereisscopeforpost-contractualopportunisticbehavior.Institutionaldevicestoreducethisconsistusuallyoflong-timecontractualrelationsorintegrationoffirms（convertinganarm-lengthtransactionintoaninternaloneanddefiningpropertyrightsasthedefaultoptioninincompletecontracts）.Long–termimplicitcontractsandpersonalized,less-than-arms-lengthtransactionsare,ofcourse,quitecommonindevelopingcountries,althoughWilliamson’simmediateconcerniswiththecorporatestructureandpracticesinindustriallyadvancedcountries.

Theimperfect-informationtheoryhasbeenfruitfullyusedinmodelingmanykeyagrarianinstitutions,whichareseentoemergeassubstitutesformissingcredit,insurance,andfuturesmarketsinanenvironmentofpervasiverisks,informationasymmetry,andmoralhazard.Itstartedwiththeliteratureonsharecropping,thenoninterlockingoftransactionsinlabor,creditandlandlease,onlabortying,oncreditrationingandsoon.Radicaleconomistshaveoftencitedsomeoftheseproductionrelationsasinstitutionalobstaclestodevelopmentinapooragrarianeconomy,overlookingthemicroeconomicrationaleoftheformationoftheseinstitutions.Underasetofinformationalconstraintsandmissingmarkets,agivenagrarianinstitution（say,sharecroppingofinterlockingofcontracts）maybeservingarealeconomicfunctionItssimpleabolition,asisoftendemandedonaradicalplatform,withouttakingcareofthefactorsthatgaverisetotheinstitutioninthefirstplace,maynotnecessarilyimprovetheconditionsoftheintendedbeneficiariesoftheabolitionprogram.Theremaybesomeimportantpoliticallessonsherefromwhatcanbecalledtheeconomicsofsecond-bestreformism.

2.FUNCTIONALISMANDOTHERLIMITATIONS

Thetransaction-costandimperfect-informationtheoriesareequallymurkyonthemechanismthroughwhichnewinstitutionsandpropertyrightsemerge.Onegetstheimpressionthatmoreefficientinstitutionsandgovernancestructuresevolveasthepartiesinvolvedcometoappreciatethenewbenefit-costpossibilities.TheliteratureismarkedbyacertainahistoricalfunctionalismandevenvulgarDarwinismonthispointAninstitution’smerefunctionofservingtheinterestsofpotentialbeneficiariesisclearlyinadequateinexplainingit,justasitisanincompetentdetectivewhotriestoexplainamurdermysteryonlybylookingforthebeneficiaryand,onthatbasisalone,proceedstoarresttheheirofthemurderedrichmanOnecannotgetawayfromtheenormityofthecollectiveactionproblemthatlimitstheabilityofpotentialgainerstogettheiracttogetherinbringingaboutinstitutionalchanges.Therearetwokindsofcollectiveactionproblemsinvolvedhere;oneisthewellknownfree-riderproblemaboutsharingthecostsofbringingaboutchangetheotherisabargainingproblemwheredisputesaboutsharingthepotentialbenefitsfromthechangemayleadtoabreakdownofthenecessarycoordination

Wehavenotedbeforetheneoclassicalinstitutionaleconomists'strongbeliefthatrelativepricechangesfuelthemainmotiveforceforinstitutionalchangesinhistory（primarilybyinducingthedevelopmentofpropertyrightstothebenefitoftheownersofthemoreexpensivefactorofproduction）.Inparticular,demographicchangesalteringtherelativepriceoflabortolandleadtotheincentiveforredefinitionofpropertyrightsonlandandarearrangementoflaborrelations:

North（l981）andHayamiandRuttan（1985）givesev