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In economics, it is accepted that countries with good 'inclusive' institutions, such as strong property rights, are more productive and able to develop faster (or even develop at all) than countries with bad 'extractive' institutions, such as forced labor (see Acemoglu 2008, Acemoglu & Robinson 2000a, 2000b, 2001, 2006, 2008; Olson 1984, Bates 1981, 1983,...


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One argument brought forward (it is a generalization/argument for lack of infrastructures) is the Acemoglu-Robinson hypothesis of extractive versus inclusive institutions. Long-story short: some institutions are good for (long term) growth ("inclusive"), and some are good for short-term extraction of resources ("extractive"). Depending on whether the elites ...


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"Institutions" can be defined in many ways... I will guess some things that might interest you: Transparency international measures every year corruption perceptions in many countries. The World Bank also measures many aspects of instutional framework of countries, for example 'ease of doing business'. OECD does a lot of analysis, you might find something ...


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Daron Acemoglu's papers on institution could be a very good way to enter in this kind of issues.


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As you point out, going by the typical doctrine of extractive institutions from Why Nations Fail (Acemoglu), we have this basic framework: Disenfranchisement of private sector leads to capital flight / brain drain If long-lasted, this leads to slower economic growth and potentially a failed state However, I think we may want more granularity here. A ...


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While a lack of infrastructure and public goods may explain poverty in a short-term perspective, it is widely considered that institutions are the key factor in the long term (how could infrastructure and public goods be provided without suitable institutions?). As well as Acemoglu & Robinson, referred to in FooBar's answer, two important writers on ...


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Articles These papers discuss institutions as institutions were covered in the economic literature. Better to read them in a chronological order. Acemoglu, Daron, and Simon Johnson. “Unbundling Institutions.” Journal of Political Economy 113, no. 5 (2005): 949–95. Acemoglu, Daron, Simon Johnson, and James Robinson. “Institutions as the Fundamental Cause of ...


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Depends on your definition of 'resolve'. In economic there were already proposed solutions for both public good and common-pool resources. However, most of those require some sort of government action, for example Pigouvian taxes/subsidies or in some cases government ownership/provision. To be more specific before Ostrom and others, literature split goods ...


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Institutions are likely having a permanent effects as they create path dependency which implies that even temporary shocks would have permanent effect. At least that is what is argued by many developmental economists including Acemoglu and Robinson (see Why Nations Fail). Furthermore, they claim that this hold not just for development itself but that the ...


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Holmström and Milgrom assume that the agent exhibits constant absolute risk aversion. This implies that if you change the total wage of the agent with a lump sum transfer (that does not depend on effort), you will not change the incentives. Hence, to find the optimal contract, you can find the contract that maximizes total surplus subject to incentive ...


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Could you help me derive Eq(5) in paper Chong (2007)? My initial derivations were wrong because I misread Eq(1) as $y_{i,t}=c_{i,t}+r_{i,t}$. It was until I read the answer posted by @AlecosPapadopoulos that I realized that the paper actually uses $y_{i,t}=c_{i,t}+r_{i,t+1}$. However, apropos of the latest edit of OP's inquiry (now to discuss the ...


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Unfortunately, economists don't have a standard, universally-accepted definition of what an 'institution' is. Hence, depending on what you're trying to study and whom you ask, businesses may or may not be an institution. So, in a way, both definitions are correct. If you're interested in different conceptual approaches to institutions, Avner Greif has ...


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