Wednesday, May 30, 2018

An interesting perspective on development by Tobias Haque

Are economists’ standard solutions part of the problem in fragile states? By Tobias Haque
Authors such as Douglas North and Mushtaq Khanhave emphasised the important role of rent generation and distribution in supporting social stability and preventing violence in the absence of strong state institutions. Elites’ capacity to generate rents and distribute them to followers both underpins their willingness to refrain from violence and the inter-elite bargaining that eventually leads to organic institutionalisation of political organisation, contracts, and property rights. This theory suggests a fundamental paradox. Attempts to implement market-enabling institutions in post-conflict settings are explicitly intended to eliminate economic distortions and rent-generating opportunities. Through an institutionalist lens, such reforms are not only unlikely to succeed in spurring economic growth and security, but may generate political instability and violence by undermining the generation of rent flows upon which social order depends.”
The supporting article A ‘good governance’ paradox? Re- examining reform of economic institutions in post-conflict contexts 

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