‘Institutions for Markets’ or Markets as Institutions: Linking Development Policy to Theory and Praxis

This paper explores policy applications of ‘new institutional economics’ theory in relation to markets and economic development. It argues for application of an analytical framework which instead of looking at institutions primarily in terms of their contributions to making competitive markets work better, sees such markets as one form of institution fulfilling exchange and coordination functions in an economy. A key element in this is recognition of the importance of processes of change in non-standard market arrangements in economic development, and there are strong theoretical, practical and historical grounds for more consistent policy in this area. JEL Classification Code: O10 (Economic Development, General)